Accountable Plan is the method UO uses for making travel reimbursements to individuals. The IRS allows employers to choose between an accountable or a non-accountable plan. Reimbursements made under an accountable plan are not taxable income. Reimbursements that do not follow the accountable plan rules are considered to be paid under a non-accountable plan and are taxable income. (Individuals may be able to deduct qualified business expenses on their tax return.)
Many of the UO travel policies exist to comply with the rules of the accountable plan set by the IRS. The accountable plans rules are
- 1) the expenses must have a business connection;
- 2) the expenses must be adequately accounted for within a reasonable period of time; and
- 3) any excess reimbursement or allowance must be returned within a reasonable period of time.
Adequate accountingis defined by the IRS as giving documentary evidence of the travel and expenses such as receipts, diary, or account book. An established per diem plan satisfies the adequate accounting requirements; consequently receipts are not required for meals. Receipts are required for lodging.