POLICYPALOOZA! Overview of Financial Policies for the T.H. Chan School of Public Health Harvard Medical School

Transcription

1 POLICYPALOOZA! Overview of Financial Policies for the T.H. Chan School of Public Health Harvard Medical School Financial Policy Office Office of the Controller October 5, 2017 Karen Kittredge, Mgr. Policy and Business Process Andrea Sexton, Director of Financial Policy and Compliance

2 Agenda Financial Policy Office Website Overview Where to find what Accountable Plan Employee and Nonemployee Gifts and Celebratory Events Gifts to Donors Common Questions and Mistakes Pop Quiz

3 Financial Policy Website: policies.fad.harvard.edu Description and links to financial policies (can download to your desktop)

4 Financial Policy Summaries

5 Financial Policies

6 Financial Policy Website

7 Financial Policy Website

8 Payments to Individuals: Taxable until proven not! Any time Harvard gives money or other value to an individual, it can have tax implications. The Accountable Plan is the set of IRS rules Harvard must follow to ensure reimbursements are not taxable to the recipient/reimbursee. The rules aren t necessarily intuitive. Some expenses -- even though they relate to work are still considered personal expenses (commuting, professional attire, etc.) SUMMARY OF ACCOUNTABLE PLAN RULES Must be substantially businessrelated not a personal expense Must be substantiated documented with receipts and business purpose Reimbursement request must be submitted timely (90 days) Amount reimbursed can t exceed actual expense

9 Business-Related For Harvard to reimburse an expense without tax implications, the expense must be: Ordinary common and accepted in the normal course of University activities; Necessary appropriate in nature and amount; and Business-Related not a personal expense Requirements: A complete business purpose (who, what, when, where, why) NOTE: The source of funding (i.e., sponsored research award) does NOT affect the tax treatment of the expense. The tax treatment of the expense ALWAYS hinges on whether or not it the particular expense is in DIRECT SUPPORT of University business.

10 Substantiation Expenses over $75 must be substantiated with receipts. What should a receipt include? Date of transaction Name of merchant Transaction details (what was purchased ) The amount of purchase The form of payment used (credit card, cash, check) Indication that the amount was paid Handwritten receipts that do not contain the above information require a Missing Receipt Affidavit (MRA) A MRA (electronic or paper) is required for lost receipts over $75 or for missing hotel folios. MRAs must be used as exceptions, not on a regular basis. See recently released: Definition of Receipts document

11 Timely Harvard Employees: Concur reports must be submitted to Travel and Reimbursements using the below time table. Days after travel date (if out-of-pocket) Result or transaction date No tax implications Expenses on Corporate Card should be paid by statement due date Expense treated as income to employee must be processed as additional pay with taxes withheld May NOT be grossed up Expense may NOT be paid with University funds Non Harvard Employees: While reimbursements to nonemployees are not technically bound by the same 90-day deadline, Harvard encourages units to pay non-employee expenses in the same fiscal quarter as they are incurred.

12 What is a gift? The IRS has many rules that restrict gifts to employees and nonemployees. If a gift does not follow these rules, the value of the gift may be reportable and/or taxable to the individual. Employees Gifts to employees must be for an allowable reason: Work-related achievement (includes milestones/retirement) Sympathy upon the death or serious illness of an employee or employee s immediate family member Gifts to employees that are not allowable: Disguised wages To be given in recognition of personal events or achievements unrelated to work (e.g., birthdays, weddings, baby showers, housewarming) or in recognition of holidays rather than work-related achievement Nonemployees Gifts to nonemployees must be motivated by detached or disinterested generosity or respect, admiration, charity or like sentiment. Gifts to nonemployees may not be given in lieu of payment for services or as a quid pro quo (this for that). 12

13 Note School and unit policies or sponsor requirements may have additional restrictions (e.g., Financial Dean or designee approval for donations or a centralized gift certificate policy). Please contact your school or unit s Finance Office for more information. These amounts are cumulative across all of Harvard. The $100 ceiling includes sales tax, delivery fees and other service charges. Personalizing a gift (engraving etc.) does not reduce the item s fair market value. Recognition should be made infrequently, and in no instances more than once per quarter. Policy website includes instructions on how to process taxable payments. An updated document, including Concur instructions, is forthcoming. 13

14 Gifts to Employees Work-related Achievement Acknowledge outstanding performance Schools or units may have established employee recognition programs. Check with your Human Resources Office to see if there is an established program in your school or unit. Service Milestone or Retirement Allowable every five years May go up to $400 as nontaxable If your school or unit participates in milestone programs, additional gifts should be modest in scope to avoid possible tax implications since gift thresholds are cumulative across all of Harvard. See FAQ regarding additional details questions regarding retirement vs farewell gift or if an employee reaches a service milestone and retires in the same year. Sympathy Can be flowers, fruit arrangement or similar Donation in Lieu of flowers is allowable Check with tub finance office for local restrictions Gifts must be made on behalf of a Harvard department not an individual (e.g., On behalf of the Controller s Office) Per IRS regulations, flowers must adhere to $100 threshold. Anything over $100 is considered 100% taxable. 14

15 Celebratory or Morale Building Events Modest amounts from appropriate funding sources to recognize employees or a department are allowable under certain circumstances. Celebrations for departing employees Occasional employee morale-building events (e.g., department wide luncheon, summer employee picnic, etc.) Holiday/Seasonal Parties Mark achievement of a major department goal Should be occasional, not more than quarterly 15

16 Gifts to Nonemployees These gifts should be motivated by detached or disinterested generosity or respect, admiration, charity or like sentiment. Gifts may not be given in lieu of payment for services or as a quid pro quo (this for that). Gifts must be valued at $100 or less Both tangible gifts and gift certificates are allowable Totals should not exceed $600 or more in a calendar year Students who have held a Harvard job in the current year are considered employees and the gift is taxable. Human Subject Payments Thresholds mirror the Human Subject Payment Policy Host/ess Gift when Travelling Employees who stay in a private residence with relatives or friends while traveling on business may be reimbursed for one appreciation gift/dinner for their host per visit, valued at $100 or less (including tax or any other charges). Random drawings or door prizes Random drawings or door prizes are not considered gifts but should follow the same thresholds. IRS treats raffles as a form of lottery which is taxed differently than a gift. 16

17 Gifts to Nonemployees, continued Crimson Cash Crimson Cash Cards or additions to Crimson Cash accounts are considered a form of gift certificate and allowable up to $100 for students, not allowed for employees. Gifts to Donors If a donor expects to receive goods or services when giving a donation, it is considered a quid pro quo (this for that) and the Fair Market Value of the gift may need to be deducted from their gift deduction. These goods or services are often publicized at the time of the donation (e.g., a tote bag promised for a donation of $50 or more). Contact the University Financial Policy Office or Alumni and Development Services for guidance. Harvard may make gifts to donors not connected to a donation. These gifts are unexpected and unpublished and given out of detached and disinterested generosity (e.g., sympathy flowers, major life events, seasonal traditions, a plaque given at a formal presentation or event or a host/ess thank you). Gifts should stay within the $100 threshold if at all possible If exceed the threshold, follow school or unit guidelines Should not exceed $600 in a tax year See Guidance Regarding Gifts to Donors (under construction) 17

18 Accounting Charge Appropriate Funding Source Federally sponsored funds must never be used to charge employee or nonemployee gifts. Non-federally sponsored funds may be used only if the expense is allowable under the terms of the award. Restricted funds may be used only if within the fund terms. Departmental unrestricted funds may be used at the discretion of the department, if the budget allows and within the boundaries of this policy. Use object code in the 845X series Expenses Ineligible for Fed Reimbursement, GENERAL Charitable Contributions^Expenses Ineligible for Fed Reimbursement 18

19 Gifts to Harvard Personnel from 3 rd Parties Harvard personnel must avoid an actual or perceived conflict of interest when accepting gifts from third parties in connection with their Harvard work. Employees who make purchasing decisions are encouraged to use particular care when accepting gifts from vendors. Employees should notify their supervisor when they are given a gift of greater than nominal value (meaning an item more substantial than standard giveaway items like t-shirts, keychains, mugs, etc.) from a third party in connection with their Harvard work. Local policies may apply; contact your tub Finance Office for more information. See the Policy on Conflicts of Interest and Commitment for Senior Staff for additional guidance. 19

20 Common Sources of Reimbursement Questions Not Reimbursable Sometimes Reimbursable Typically Reimbursable Everyday clothing and footwear (even formal wear for a University event) Home office furniture and equipment (even if used when working from home) Daily commuting expenses from home to regular place of work Regular meals (i.e., not business meals ) Personal services (i.e., barber, hairstylists, etc.) Expenses payable by outside organizations Overnight hotel stays near campus Laundry Software, e-books used for a Harvard project Books that are used for a Harvard project and that will remain University property Purchase or rental of regalia for employees participating in commencement exercises

21 Common Errors Reimbursement requests are often returned or rejected because of Missing or insufficient detailed business purpose (who, what, where, when, why) Missing Receipts over $75.00 or no signed Missing Receipt Affidavit (MRA) Nonemployee reimbursement is processed as a Payment Request (PR) rather than a Non- Employee Reimbursement (NR) through HCOM If a traveler is using a per diem instead of actual expenses, the per diem rate cannot exceed the federal per diem rate (the use of per diems is at the discretion of the school or unit) Expenses are taxable to an individual Sympathy flowers to an employee exceed $100 Gift certificate to an employee Expenses exceeding 90 days which do not include the appropriate additional pay form Corporate card payments which are taxable must include Add Pay Gift/Third Party form and the form and associated receipts included in the Concur expense report header. The employee information is for the individual who received the gift and the External 3 rd Party is Citibank. Check includes additional pay box at the expense report header in Concur

22 Pop Quiz! Q: A department wishes to give a gift certificate of $ to a security guard who works for Securitas as a thank you for their outstanding work at commencement. A: While gift certificates are allowable for nonemployees, this has the appearance of a spot bonus rather than a gift of disinterested generosity or respect. A group morale-building event (e.g., barbeque) may be more appropriate. What about if this was to an employee? This is not allowable because it is a gift certificate. Q: An individual retiring from Harvard after 20 years of service receives a Harvard Chair worth $ as a retirement gift. A: Because this is a longer-service employee and is for retirement, only $99.99 is taxable to the individual. Q: An employee wins a Fitbit valued at $ after completing an HR survey. A: This is allowable since it is $100 or less. What about if the Fitbit was over $100.01?. This is considered 100% taxable to the individual. Q: A department which brought in therapy dogs for students to pet as a stress reliever during finals gives a gift basket to each of the pet owners as a thank you. A: How much was the gift basket? If $100 or less, allowable. The pet owners were not expecting the gifts and was for detached and disinterested generosity. Q: The Dean s Office holds a school-wide Holiday event, and a separate event for those people who report directly to the Dean. At the 2nd event, staff are given gift baskets with a value of $ What is or is not allowable? A: The event s are allowable. The gift baskets have the appearance of a gift for recognition of a holiday rather than a work related achievement and are considered taxable. 22

23 Pop Quiz! Q: A faculty member submits a reimbursement request for an airline club membership. The business purpose noted is that the club is used when waiting a hour between flights to work on Harvard business. A: This is not allowable. While the expense appears reasonable, the membership is in the individual s name and can be used for personal use. Q: A tub s Development Office purchases a membership to the Harvard Faculty Club of New York. They note the membership will be used to house staff while on business in NY and they will use the facilities for developmental programs and events. A: This would be allowable with Financial Dean approval. While the expense is not ordinary, it is being used in several ways for University business. The membership must be under the name of a Harvard Department and not an individual. In rare cases, other types of memberships may be allowable (e.g., Amazon Prime); however these memberships must be approve by a Financial Dean, linked to a Harvard-only Business non-taxable business account, linked to a Harvard account and may only be used for Harvard-related business. Q: An employee whose office is located on the Longwood campus submits a receipt to be reimbursed for daily parking at their office. A: Parking as part of your regular daily commuting expense is not allowed. Exceptions which may be allowable include: parking on campus if the event begins or ends after normal working hours; for security/safety (not walking back to regular parking late at night); for medical reasons; and/or for transportation of items to meeting/event. When traveling to an off-campus temporary business destination, travel expenses such as parking or mileage is allowable. For example, an employee stationed at the Harvard Medical School may request reimbursement when parking at University Place on the Cambridge campus to attend a meeting. 23

24 Pop Quiz! Q: A research assistant is flying to a country that requires specific immunization shots and requires a special VISA to get into the country. A: Costs associated with obtaining the necessary VISAs and immunizations required for travel to non-u.s. destinations on Harvard business are allowable. Q: An employee traveling for 2 weeks submits for reimbursement for hotel laundry services. A: Individuals on travel for over 5 days are eligible for laundry service expenses. Q: A faculty member is a keynote speaker at a conference in Italy. The conference will pay them an honorarium and travel costs. Should Harvard pay for the plane ticket and be reimbursed later? A: These are payments from outside organizations. The faculty member should incur expenses on their personal credit card and be reimbursed directly by the outside organization. Q: Same instance as above, but the faculty member says that Harvard is benefiting from this conference since they are a Dean and are representing Harvard. They believe Harvard should pay for the plane ticket and request reimbursement from the outside organization. A: It can be difficult to determine personal and Harvard business. In the above instance, unless there is an extenuating circumstance, such as the outside organization s willingness to pay or a multi-leg trip which includes Harvard business, because the faculty member is receiving an honoraria, the expenses lean more towards personal than Harvard business. 24

25 Additional Materials BER Reimbursement Type - Foreign Individual Fellowship Payments and Reimbursements for Students and Non-Employee Postdocs/Fellows Gifts and Celebratory Events for Employees and Nonemployees Gifts Updates and FAQ Guidance Regarding Gifts to Donors - Forthcoming Job Aid on Completing Reimbursement Forms Processing Taxable Payments Sponsored Programs Policies Travel Policy

26 What is a Harvard Employee? Employee Concur Bi-Weekly (PFX, PON, POU) Faculty Monthly (MFC) Internal Post-Docs (MIP) Nonemployee HCOM Weekly Temps (includes less-than-half-time) (LHT, WTM, WST) Hires Pay Group (HRH, HRA, HRM, HRW) Students (stipend) (MST) External Post-Docs (MEP) Monthly Teaching Fellows (MTF) Non-Paid (NPD) Long-Term Disability (LTD) Retiree Payrolls (RET, RMF) Outsourced Payrolls (OUB, OUM, OUS, OUW, OWC)