Reimbursement of Employee Education Expenses - PDF

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					                             EMPLOYEE BUSINESS EXPENSES

                          PRESBYTERIAN CHURCH OF THE WAY

                                         September 30, 2010




                                           Table of Contents

            1.0     INTRODUCTION                                2

            2.0     INSTRUCTIONS                                2
            2.1       Employee Business Automobile Expenses     3
            2.2       Other Employee Business Travel Expenses   3
            2.3       Employee Business Meeting Expenses        3
            2.4       Employee Continuing Education Expenses    4
            2.4.1      Continuing Education Courses             4
            2.4.2      Magazine Subscriptions and Books         4
            2.5       Employee Cellular Phone Expenses          5
            2.6       Employee Personal Computer Expenses       5
            2.6.1      Computers                                5
            2.6.2      Internet Service                         6
            2.6.3      Computer Software                        6
            2.7       Cash Advances                             6
            2.8       Church Credit Cards                       7




Approved by the Finance Committee 5/4/2010.
Revision approved 9/30/2010..
Presbyterian Church of the Way                                        Employee Business Expenses


1.0     INTRODUCTION

       This document describes employee business expenses and instructions for recording and
       reporting those expenses.

       Failure to comply with these instructions may result in the reimbursement being treated by the
       IRS as taxable income to the employee and expose the employee to back taxes, penalties and
       interest.

       Employees will be reimbursed for every business expense under the following conditions:

       a.   The expense is approved by the appropriate ministry group.
       b.   The amount of the expense is reasonable.
       c.   The amount, date, place, and business purpose of the expense is documented.
       d.   Requests for reimbursement are submitted as described in these instructions.
       e.   Excess cash advances, if any, are returned as described in these instructions.

       In accordance with IRS regulations, reimbursements will not result in a reduction of salary.

       Requests and documentation used to substantiate reimbursement of a business expense will
       be retained by the Treasurer for a period of seven years.

2.0    INSTRUCTIONS

       The employee business expense reimbursement instructions address:

       a.   Employee business automobile expenses.
       b.   Other employee business travel expenses.
       c.   Employee business meeting expenses.
       d.   Employee continuing education expenses.
       e.   Employee cellular phone expenses.
       f.   Employee personal computer expenses.
       g.   Cash advances.
       h.   Church credit cards.

       These instructions do not alter the requirement that payment of the expenses must be
       authorized via Payment Orders submitted by the applicable ministry group.



Revised September 30, 2010                     Page 2
Presbyterian Church of the Way                                        Employee Business Expenses



2.1    Employee Business Automobile Expenses

       Employees are eligible for reimbursement of business-related automobile expenses at the IRS
       mileage rate in effect at the time of the expense, as well as any tolls and parking fees.

       Requests for reimbursement of out-of-pocket expenses shall be submitted to the Treasurer
       using the Business Mileage Reimbursement Form. Requests shall be submitted within sixty
       days of the first expense.

       Records of tolls and parking fees paid with a church credit card shall be submitted using the
       Credit Card Expense Reconciliation Form described in Paragraph 2.8.

       Note that odometer readings are considered by the IRS as being necessary to substantiate the
       integrity of the mileage figures. However, the Treasurer will accept map-generated mileage
       figures in place of odometer readings.

2.2    Other Employee Business Travel Expenses

       Employees are eligible for reimbursement of business-related travel expenses subject to the
       approval of the appropriate ministry group.

       Employees may be reimbursed for air travel, travel agency fees, baggage fees, car rental,
       lodging, meals, laundry and dry cleaning, and phone calls (including calls home) as long as the
       expenses are itemized. Transportation, meals, lodging, and recreation on youth mission trips,
       ski trips, and other group excursions may also be reimbursed.

       Requests for reimbursement of out-of-pocket expenses shall be submitted to the Treasurer
       using the Business Expense Reimbursement Form. Receipts for each expense exceeding
       $25.should be attached to the form. Requests shall be submitted within sixty days of return.

       Records of travel expenses paid with a church credit card shall be submitted using the Credit
       Card Expense Reconciliation Form described in Paragraph 2.8.

2.3   Employee Business Meeting Expenses

       Employees are eligible for reimbursement of business-related meeting expenses subject to the
       approval of the appropriate ministry group.
       .

Revised September 30, 2010                    Page 3
Presbyterian Church of the Way                                       Employee Business Expenses

       Requests for reimbursement of out-of-pocket expenses shall be submitted to the Treasurer
       using the Business Expense Reimbursement Form. Receipts for each expense exceeding
       $25.should be attached to the form. Requests shall be submitted within sixty days of meeting.

       Records of business meeting expenses paid with a church credit card shall be submitted using
       the Credit Card Expense Reconciliation Form described in Paragraph 2.8.

2.4    Employee Continuing Education Expenses

2.4.1 Continuing Education Courses

       Employees may be eligible for reimbursement of continuing education course expenses with
       prior approval of the Personnel Committee.

       Requests for reimbursement of out-of-pocket expenses shall be submitted to the Treasurer
       using the Business Expense Reimbursement Form. Receipts for each expense exceeding
       $25.should be attached to the form. Requests shall be submitted within sixty days of expense.

       Records of continuing education course expenses paid with a church credit card shall be
       submitted using the Credit Card Expense Reconciliation Form described in Paragraph 2.8.

       Books and course materials requisite for course participation and/or included in the course
       registration fees are the property of the attendee.

2.4.2 Magazine Subscriptions and Books

       Employees may be eligible for reimbursement of the cost of business-related magazine
       subscriptions and books with prior approval of the Personnel Committee.

       Requests for reimbursement of out-of-pocket expenses shall be submitted to the Treasurer
       using the Business Expense Reimbursement Form. Receipts for each expense exceeding
       $25.should be attached to the form. Requests shall be submitted within sixty days of expense.

       Records of expenses paid with a church credit card shall be submitted using the Credit Card
       Expense Reconciliation Form described in Paragraph 2.8.

       Magazine subscriptions and books for which the cost has been reimbursed to the employee
       become the property of the church. Upon leaving employment, the magazines and books may
       be purchased by the employee for their residual value. Magazines are assumed to have
       negligible residual value after a few months. The IRS has ruled that books older than seven
Revised September 30, 2010                    Page 4
Presbyterian Church of the Way                                           Employee Business Expenses

        years have negligible residual value. For books less than seven years old, the internet or a
        used-book store may be used to determine residual value. Failure to comply may be treated
        by the IRS as an inurement, a diversion of church funds for the benefit of an individual.

2.5     Employee Cellular Phone Expenses

        This paragraph addresses the reimbursement of cellular phone expenses for pastors. Other
        employees may be reimbursed for phone calls while on business travel, including phone calls
        home, as noted in paragraph 2.2.

        The availability of a cellular phone is required for a pastor to properly perform his/her duties in
        emergencies and at other times. The availability of a cellular phone enables the pastor to be
        accessible in emergencies, such as the death or hospitalization of a church member. Hence,
        the availability of the pastor’s cellular phone is both for the convenience of the church and a
        condition of employment. As a consequence, the IRS will allow reimbursement of the pastor’s
        cellular phone expenses provided the pastor adequately substantiates the business use of the
        phone and excludes from reimbursement personal or non-business expenses.

        Requests for reimbursement of out-of-pocket cellular phone expenses shall be submitted to
        the Treasurer using the Business Expense Reimbursement Form. Requests shall be submitted
        within sixty days of expense.

        Records of expenses paid with a church credit card shall be submitted using the Credit Card
        Expense Reconciliation Form described in Paragraph 2.8
        .
        For short-term cellular phone availability, such as for emergency use on a youth mission trip,
        the church may purchase a disposable cellular phone which would be returned to the church
        following the need for availability.

2.6     Employee Personal Computer Expenses

2.6.1   Computers

        The availability of a laptop or desktop computer for use away from the church can rarely be
        substantiated as being for the convenience of the church and a condition of employment. The
        argument used to justify the availability of a pastor’s cellular phone cannot be applied to the
        availability of a laptop or desktop computer for home use.




Revised September 30, 2010                       Page 5
Presbyterian Church of the Way                                         Employee Business Expenses


       However, pastors may elect, with approval of the Personnel Committee, to use a portion of
       their budgeted professional allowances to purchase personal computer equipment. If so, the
       computer is the property of the pastor and is a taxable benefit.

2.6.2 Internet Service

       The availability of internet service for use at home can rarely be substantiated as being for the
       convenience of the church and a condition of employment.

2.6.3 Computer Software

       Employees may be reimbursed for business-related computer software expenses use at the
       office and/or at home. There must, however, be a clear business use.

       Home computer upgrades needed to maintain compatibility with new church standards, such
       as Word 2007 vs. Word 97 may be reimbursed even though the home upgrade is not used
       exclusively for business.

       Requests for reimbursement of out-of-pocket expenses shall be submitted to the Treasurer
       using the Business Expense Reimbursement Form. Receipts for each expense exceeding
       $25.should be attached to the form. Requests shall be submitted within sixty days of expense.

       Records of expenses paid with a church credit card shall be submitted using the Credit Card
       Expense Reconciliation Form described in Paragraph 2.8.

       Computer software for which the cost has been reimbursed to the employee become the
       property of the church. .

       Upon leaving employment, the original software may be purchased by the employee for its
       residual value. . The IRS has ruled that computer software older than three years have
       negligible residual value. Failure to comply may be treated by the IRS as an inurement, a
       diversion of church funds for the benefit of an individual.

2.7    Cash Advances

       An employee receiving a cash advance to pay business-related expenses shall record and
       report the expenses as defined elsewhere in these instructions and return any unused cash
       within 120 days of receiving the advance.


Revised September 30, 2010                     Page 6
Presbyterian Church of the Way                                         Employee Business Expenses

2.8    Church Credit Cards

       Church credit cards may be used for business expenses having some personal benefit to the
       employee and for goods and services purchased on behalf of the church for which there is no
       personal benefit to the employee. There are four key points to be considered.

            a. The use of a church credit card by an employee is considered by the IRS as being a
               cash advance.
            b. Approval of the credit card purchases and payment of the credit card statement by the
               church constitute a reimbursement to the employee of the cash advance.
            c. Without adequate documentation, the expenses will probably be assumed by the IRS to
               have some personal benefit.
            d. Church credit cards shall not be used for personal expenses or for purchases made on
               behalf of other organizations. These expenses are disallowed and must be refunded.

       As a consequence, records must be prepared and retained showing the business purpose of
       each charge and whether or not there is some personal benefit to the employee.

       All church credit card purchases shall be submitted using the Credit Card Reconciliation Form.
       Instructions for completing the form are as follows.

       a.   Enter your name.
       b.   Enter the date of submittal.
       c.   Enter the reference number of each transaction (shown on the credit card statement).
       d.   Enter the business purpose of each transaction.
       e.   Distribute the cost of each transaction using columns A, B, and/or C.
       f.   Sign the form.
       g.   Attach a copy of your credit card statement.
       h.   Attach a copy of check(s) used to refund any disallowed expenses.
       i.   Use additional forms if more entries are needed

       Note that there is no need to record the transaction date or the description of the transaction
       appearing on the credit card statement.

       Column A is used to record business expenses having some personal benefit (those expenses
       covered in paragraphs 2.1 through 2.6). Column B is used to record business expenses having
       no personal benefit, that is, purchases of goods and services on behalf of the church such as
       office supplies, etc. Column C is used to record disallowable expenses which must be
       refunded.


Revised September 30, 2010                     Page 7

				
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