Expense reimbursement is a method for paying employees back when they spend their own money on business-related expenses. These expenses include travel, hospitality, and small business related purchases.
Brown University’s expense reimbursements plan follows the requirements of the Internal Revenue Service Code Section 62 on Accountable Plans.
An Accountable Plan is any reimbursement or other expense allowance arrangement that meets all of the following requirements:
- Business connection: The arrangement provides reimbursements of an employee’s business expenses paid or incurred in the performance of services as an employee.
- Substantiation: The employee must submit information to the payer sufficient to satisfy the “adequate accounting rules” with respect to travel, entertainment, or other business expenses. For other reimbursed expenses, information must be submitted that is sufficient to enable Brown University to identify the specific nature of each expense and to conclude that the expense is an employee business expense. Each of the elements of an expenditure or use must be substantiated. Expenses must be substantiated within 60 days of expense. (See FAQs for additional information.)
- Return of excess amounts: The arrangement must require that an employee return to the payer within a reasonable time the amount of the reimbursement or allowance that exceeds the substantiated expenses. A reasonable period of time is defined under a safe harbor as an expense or advance substantiated within 60 days and any excess advance returned within 120 days of when the expense is paid or incurred. If an employee fails to return amounts in excess of the substantiated amounts within a reasonable time, only the amounts not in excess of the substantiated amounts are excludable from gross income. The unsubstantiated amounts are considered gross income subject to withholding and must be reported on Form W-2.
Certain transactions will not be reimbursed under Brown’s Accountable Plan:
- Transactions that are determined to be of personal use or personal benefit will not be reimbursed.
- Payment of independent contractor services (including guest speaker), by an employee, will not be reimbursed.
- Payment of travel expenses for individuals not employed by or enrolled at Brown, by an employee, will not be reimbursed.
- Items that are restricted purchases, as defined on the Insurance and Purchasing Services website, are not reimbursable.
Requests for the reimbursement of purchases that do not comply with Brown’s Accountable Plan rules may, with the approval of the employee’s manager and/or Senior Officer Approval, be processed as a payroll adjustment. The payment may be grossed-up if department funds are available for the additional payment.
Expense reimbursement is not intended for the routine purchase of office supplies or other business related expenses. The Office of Insurance and Purchasing Services’ strategic sourcing initiative lists acceptable methods of ordering University goods and services. In summary:
- Goods and services $3,000 or more, and goods that are restricted purchases require a purchase order,
- Goods under $3,000 should be charged to a PCard,
- The Workday Punchout is the acceptable method to purchase office supplies (OfficeMax), scientific supplies (Fisher Scientific), and computers (Dell),
- Amazon Business is available for a wide variety of purchases included books and supplies not available from on the Workday Punchout.
The University is a tax exempt organization. Every effort must be made to avoid paying sales tax. Purchases for University business should be made through one of the acceptable methods to avoid paying sales tax and support the University’s strategic sourcing initiatives. Please review the list of states where Brown University is exempt from sales tax.
All Employees: All employees seeking reimbursement of business related expenses need to be familiar with Brown’s reimbursement policies located on the Administrative Policies Website, maintain required receipts, and provide a complete business purpose for the purchase/reimbursement. Employees must submit expenses for reimbursement within 60 days of the expense. (See FAQs for additional information.)
Manager: Managers are responsible for reviewing and approving staff expense reimbursements. This review includes approving the purchase and the business purpose of the transaction.
Cost Center Manager: Cost Center Managers are responsible for reviewing and approving the worktags used on a reimbursement transaction. They are also responsible for ensuring the business purpose complies with the requirements in the Business Purpose Policy and that receipts supporting the transaction are attached.
Accounts Payable: Accounts Payable reviews all transactions to ensure compliance with Brown University’s Accountable Plan.
- All employee expense reimbursements are initiated in the Workday Expenses worklet.
- There are specific policies for reimbursements related to travel, business meals and hospitality, moving, gifts, etc. Review those specific policies for additional requirements.
- Visitor travel reimbursements are not initiated in the Workday Expenses worklet but instead as a supplier invoice. Review the Visitor Travel Reimbursement Policy for more information regarding those payments.
- Expenses older than 60 days
- Initiate expense report in Workday using the Workday Expenses worklet.
- Accounts Payable will review the transaction for policy compliance.
- Accounts Payable will code the expense transaction for payment in the employee’s paycheck.
- Expenses will be submitted to the Payroll Office by the payroll cut-off date and processed in the last payroll of each month.
- Both the employee being paid and the cost center manager who approved the expense report will receive an email notification from Workday stating that the expense will be paid in the employee’s payroll check.