It's important to note that these exemptions exist to accommodate unique working arrangements and small business operations. All claims for reimbursement shall be accompanied by lodging expense receipts. If housing or meals are provided, the reimbursements may be less than, and cannot exceed, the lodging and meal and incidental expense reimbursements pursuant to subsection C of this section. Section 2802; 820 Ill. Comp. This will help combat employees sitting on reimbursement requests for months or years, but ultimately the deadline to submit a reimbursement request will depend on state specific laws where they exist. Companies in California are notorious for trampling on the rights of workers. Q ta$DLatBi$`1 #,b As of Jan. 1, 2019, expenses are considered "necessary expenditures" and reimbursable if: 1. This reimbursement law was challenged as being an increase in compensation in violation of the Constitution. Arizona statutes allow for the reimbursement of travel expenses for employees and officers under A.R.S. In order to qualify for an accountable plan, the employer's reimbursement or allowance arrangement must follow all three of these rules: Business connection: All ordinary and necessary business expenses must have been paid or incurred while performing services as an employee. 949 0 obj
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Implement an Accountable Reimbursement Plan. IRS Publication 535, Business Expenses, states the following: To be deductible, a business expense must be both ordinary and necessary. A state employee while traveling on authorized state business shall be reimbursed for actual lodging expenses incurred not to exceed a predetermined amount pursuant to subsection C of this section. The only time that the FLSA impacts work-from-home reimbursements is if the cost would lower the employees earnings beneath the applicable minimum wage. Code. : SECTION V . A former Los Angeles prosecutor, attorney Neil Shouse graduated with honors from UC Berkeley and Harvard Law School (and completed additional graduate studies at MIT). There is no federal law that requires employers to reimburse their employees for employment-related expenses, and few state laws do so, either. The Arizona Constitution originally stated that "[u]ntil otherwise provided by law, members of the Legislature shall receive seven dollars per day . Which states are at the forefront of this legislative SeeA.R.S. Please enter your username or email address. Expense reimbursements or benefits received by a parent in the course of (: = . hbbd``b`9$ #5 "*MD${H <7' *@, KHp($W0012Y"!3(n0 p
Page 16 of IRS Publication 15, (Circular E), Employer's Tax Guide, states that expense reimbursements do not have to be included in an employee's wages if the business has an accountable plan. Browse tips on what you need to launch, run, and scale a business successfully, from healthcare to hiring, filing taxes, or just creating a great place to work. 38-624 - Lodging expenses; meal and incidental expense reimbursement and long-term subsistence allowance; items covered by reimbursement; amount predetermined by department of administration from 2020 Arizona Revised Statutes (a) General rule. 41-1104. The director of the department of administration shall also establish policies and procedures for the claiming of lodging and meal and incidental expense reimbursements and long-term subsistence allowances by persons temporarily required, for a period of not less than thirty days, to reside away from their primary place of residence. Id. They should not be construed as legal advice, and readers should not act upon the information contained in these publications without professional counsel. 41-1104). Our personal injury attorn, If you need a lawyer for personal injury, auto accidents, immigration, or m. How do you qualify? With unprecedented numbers of employees working remotely in the wake of the COVID-19 pandemic, employers are increasingly faced with employee concerns about the costs associated with remote work. Definitely recommend! The hiring of a lawyer is an important decision that should not be based solely upon advertisements. Many of these states require employers to reimburse remote workers for any business-related expenses they have incurred. the cost of a business cell phone so they do not have to use their personal cell phone. As mentioned, these new laws may require your department to tweak its current T&E policies and practices to align with state-specific rules. Code 62(a)(2)(D) allows an eligible educator to deduct from federal gross income unreimbursed, qualified expenses (e.g., expenses for books, supplies, and computer equipment used in the classroom; expenses incurred during qualified professional development courses). Separation of Duties. (This has remained the same for the last few years.) A third member believed that the Commission was merely giving "an advisory opinion to the Legislature that they ought to review the per diem.". art. Section 39-2-701(1)). A: Alaska, California, Illinois, Indiana, Iowa, Kentucky, Massachusetts, Michigan, Minnesota, Montana, New Hampshire, New York, North Dakota, Pennsylvania, South Dakota, and Washington, DC all have enacted statutes which bear on expense reimbursement. Keep expense reimbursement separate from regular wages. Learn more about IRS rules and accountable reimbursement plans. They were so pleasant and knowledgeable when I contacted them. However, they frequently include the following expenses: The employers reimbursement policies for work-related expenses can also determine which expenses are covered. 2. Our company values are reflected in our product and in our team. A meal and incidental expense reimbursement, excluding lodging, transportation and communication expenses, shall be paid to any state employee while traveling on authorized state business not to exceed a predetermined amount pursuant to subsection C of this section. Resourceful Finance Pro, part of the SuccessFuel Network, provides the latest Finance and employment law news for Finance professionals in the trenches of small-to-medium-sized businesses. of The Commission also recommended that per diem paid to legislators be commensurate with that provided for non-elective state employees. With this unprecedented shift in working habits, employers may be overlooking business-related expenses being incurred by their employees. Sign up for our free summaries and get the latest delivered directly to you. Your company required or approved the employee to make the expense. at 2(b). Where an employee incurs expenses on his employer's behalf or where he is required to expend sums by reason of action taken for the convenience of his employer, section 7 (e) (2) is applicable to reimbursement for such expenses. Arizona Revised Statutes Title 23.
{KmT8(PI[I_,WH#R 62 (a)(2) and (c)(2); 1.62-2(c)(4). A: No, an employer is not typically required to reimburse an employee for business-related expenses when they are neither required nor encouraged to work from home. Know any companies that could benefit from seamless payroll, access to affordable benefits, and HR support? Detailed Instructions for the Form GAO-502, State of Arizona Employee Expense Reimbursement Form . endstream
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It should outline all of the business-related expenses that an employee can get reimbursed for. See Ruiz v. Hull, 191 Ariz. 441, 459, 957 P.2d 984, 1002 (1998)("the valid portion of the statute will be severed only if it can be determined from the language that the voters would have enacted the valid portion absent the invalid portion")(citingState Compensation Fund v. Symington, 174 Ariz. 188, 195, 848 P.2d 273, 280 (1993)). Justworks helps businesses with their benefits, payroll, and everything else they need to take care of their team. 180, 2 (currently codified at A.R.S. Monthly tips on running a business in your inbox. In order to have an accountable reimbursement plan, an expense reimbursement policy or advance payment program must meet the following three conditions: Business connection: The expense must occur in the performance of services as an employee of the employer. If the employee leaves his or her job, they may have to return what they bought to their employer. 61 (a)(1), whereas payments such as per diem that are intended to reimburse an employee for expenses incurred on behalf of the employer, are generally considered to be nontaxable. When an employer reimburses an employee pursuant to an accountable plan, the reimbursement wont count as wages or income to the employee. The employee submitted the expense for reimbursement with proper supporting documentation* (i.e., a receipt) within 30 calendar days of when it was incurred. Code of Federal Regulations Title 47. The employee also must submit business expenses within a reasonable period of time after they occurred. 8sX~&o. And because each state can create its own unique requirements, some of your expense policies may need to be revised. This Office reached a similar conclusion in 1980. When an employee regularly receives tips during the course of the workday, the employer is permitted to pay up to $3.00 per hour less than minimum wage. art. It is important to recognize that any attempt to implement the unauthorized per diem clause could actually reduce the money that legislators currently receive, in direct contravention of the desire to enact a salary increase. . Courts in the Golden State have also said companies should pay for similar items like Internet expenses, data plans and other computing expenses. Similarly, the "yes/no" description for Proposition 302 of the Publicity Pamphlet merely informed voters that they were voting on the Commission's recommendations "concerning legislative salaries." To comply with state law (Arizona Revised Statutes (A.R.S. In 1958, the Legislature placed on the ballot, and the people approved, an amendment to the Arizona Constitution that provided for an annual legislative "salary of one thousand eight hundred dollars as compensation for services . Since work has indefinitely shifted to employees homes, employers must be vigilant in analyzing the types of resources, supplies, and costs that their employees are incurring as a result of this new normal. Employers should consider reimbursing costs such as a reasonable percentage of use for things like home electricity, personal cell phones, printer paper, pens/pencils, etc. The lengthy history distinguishing salary from reimbursement (including per diem) in Arizona leads to the conclusion that the Commission has constitutional authority to recommendonlysalary changes. D. The director of the department of administration shall establish in the state accounting manual uniform procedures by which amounts less than the maximum lodging and meal and incidental expense reimbursement amounts may be claimed by a person who is in travel status for less than a full twenty-four hour period or by a person who does not provide lodging receipts. )bdpw]o*)w1@3T l7+96CNxbjQg(@DkV`02(6CHzrd+=}eN^
eBhx.D?2:6dt{w5D&9?bDe M7`ih3lV For example: Companies usually mandate receipts. Under Arizona law, two provisions are severable if severance is consistent with the intent of those who created the law. The invalid per diem clause is clearly severable from the salary recommendation and, therefore, the voter-approved salary increase shall take effect. This approach is likely effective for employers in dealing with cell phone reimbursements as an employees cell phone bill is usually a fixed cost. h233Q0Pw/+Q0L)63 )I0i1P *V? U? Baker & Hostetler LLP publications are intended to inform our clients and other friends of the firm about current legal developments of general interest. D.C. Municipal Regulation Title 7, Section 910.1, Massachusetts General Law Chapter 149, 148A, Fraelick v. PerkettPR, Inc., 83 Mass. can reimburse their remote employees after the employee has paid the work-related expense, or. art. The voters did not intend this result when they passed Proposition 302. These are not typical expenses that employers would reimburse. Further, Arizona statutes The cost of work-related travel, including transportation, lodging, meals, and entertainment that meet the criteria outlined in IRS Publication 463, Travel, Entertainment, Gift, and Car Expenses, are generally reimbursable expenses. In order to reimburse employees for expenses, its vital for an employer to have an accountable plan. The Tax Cut and Jobs Act eliminated this deduction for W-2 employees from 2018 through 2025. A state employee while traveling on authorized state business shall be reimbursed for actual lodging expenses incurred not to exceed a predetermined amount pursuant to subsection C. All claims for reimbursement shall be accompanied by lodging expense receipts. Id. Before you decide, ask us to send you written information about our qualifications and experience. Under these circumstances, the invalid per diem restriction must be severed from Proposition 302, allowing the salary increase, alone, to take effect. ." Former ARIZ. CONST. 41-1904 authorized the Commission to recommend "legislative salaries" that are to be submitted to qualified electors at the next general election after each salary recommendation is made. art. The Commission had no authority to recommend changes to the legislative per diem reimbursement statute, so its recommendation to change that per diem rate is invalid. Copyright 2013-2023 Justworks, Inc. and its affiliates. The commissioners were the architects of the language and intended that the salary increase be allowed to stand even if the per diem clause were invalid. Most businesses reimburse such expenses, but are business expense reimbursements taxable income to the employee? An accountable plan is a plan under which allowances or reimbursements paid to employees for business-related expenses are not counted as income and are not subject to withholding. This distinction between salary and per diem reimbursement is not unique. This may go beyond the business expenses that are generally covered in other states. endstream
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Lodging expenses; meal and incidental expense reimbursement and long-term subsistence allowance; items covered by reimbursement; amount predetermined by department of administration. These types of reimbursable expenses tend to occur when employees travel for work, but can be associated with other activities related to their employment, including, for example, certain purchases of work-related supplies or tools. Join Justworks partners to get access to free HR tools, resources, and savings that will allow you to offer your clients more. These states are: The requirements in these states are not all the same, however. Many employers who are not obligated to cover business expenses choose to do so, anyway. 1130 0 obj
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Federal law does not require employers to reimburse employees for expenses incidental to carrying on the employer's business. online subscriptions, like a paid plan for Zoom. See Earhart v. Frohmiller, 65 Ariz. at 226, 178 P.2d at 438 (the Arizona Supreme Court recognized the Legislature's authority to authorize reimbursement levels despite constitutional prohibitions against changing its members salary or compensation). They shall also receive mileage one way, by the shortest practicable route, at the rate of twenty cents per mile."
2023 LawServer Online, Inc. All rights reserved. . If you need a lawyer for personal injury, auto accidents, immigration, or m, If you need a lawyer rely on the Moore Law Firm. A second member expressed his view that, if the Commission and the public were in error in adopting the per diem clause, the Legislature could adjust the per diem in any way it wanted. Not doing so could subject an employer to potential liability. The director may change the maximum amounts from time to time and may establish a separate maximum amount for geographical areas of the United States if the director finds that the reasonable cost varies significantly in one or more areas. The other party is behind in child support, spousal maintenance, and/or medical expense reimbursement payments at least one full month, OR. A: An employer is likely not responsible for the entire personal cell phone bill of an employee simply because that employee uses his/her personal cell phone for work purposes. . Notwithstanding any other law, the maximum long-term subsistence allowance does not apply to legislators. Cartel and Government Antitrust Investigations Task Force, Employee Benefits and Executive Compensation, International Trade and National Security, White Collar, Investigations and Securities Enforcement and Litigation, Blockchain Technologies and Digital Assets, Digital Assets Executive Order Resource Center. Our mission is to help entrepreneurs and businesses grow with confidence. Stat. 41-1104.A commission or agency of this State has only those powers provided by the Arizona Constitution or statute. C. The director of the department of administration shall establish maximum amounts for reimbursement for lodging and meal and incidental expenses or long-term subsistence incurred pursuant to subsections A and B of this section, based on federal guidelines for these types of expenses or other reasonable rates as determined by the department. Generally, this wont include commuting expenses between an employees home and workplace. The director of the department of administration shall also establish policies and procedures for claiming lodging and meal and incidental expense reimbursements and long-term subsistence allowances by persons temporarily required, for a period of not less than thirty days, to reside away from their primary place of residence. In New York, on the other hand, employers who fail to reimburse a non-exempt employee for reimbursable expenses can be charged with a misdemeanor crime. While theyre not required by the IRS, accountable plans help you set criteria that comply with IRS regulations on what reimbursements are deductible and what reimbursements count as taxable income. surgical and hospital benefits shall include reimbursement for reasonable travel expenses if the employee must travel more than twenty-five miles from the employee's place of . Thats where employee expense reimbursement comes in. Instead, whether work-related expenses must be reimbursed by employers is a matter of state law. Essentially, these are laws requiring companies to reimburse employees for necessary expenditures incurred on the job. Maximum amounts established by the director shall be subject to approval by the joint legislative budget committee. Those expenses can further get defined as expenses . Substantiation: The employee must substantiate his or her business expenses by providing the employer with evidence of the amount, time, place, and business purpose of the expense. In Ariz. Att'y Gen. Op. The director may change the maximum amounts from time to time and may establish a separate maximum amount for geographical areas of the United States if the director finds that the reasonable cost varies significantly in one or more areas. Remote work is quickly becoming a staple for the modern workforce. The, must substantiate his or her business expenses. When the Commission on Salaries for Elective State Officers ("Commission") recommended changing legislative"per diem"rates, it acted beyond its statutory power to recommend changing legislative"salaries." 41-1104.(1). The employee submitted the expense for reimbursement with proper supporting documentation * (i.e., a receipt) within 30 calendar days of when it was incurred. [13] See IRS Publication 5137 (Rev. Copyright 2023 Shouse Law Group, A.P.C. By the time the Commission was created in 1970, Arizona courts had distinguished between "salary" or "compensation" and "reimbursement." Legislative reimbursement continued to be governed by then A.R.S. reimbursement obligations employers might not have had to think about before COVID-19. Expenses that were properly incurred in the administration of the trust. Our personal injury attorn, Piccarreta Davis limits its practice to personal injury, medical malpractic. Proposition 302 had its origins with the Commission. This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, legal or tax advice. Authorship Credit:Carter Norfleet and Shareef Farag. In connection with recommending remuneration for legislators, the Commission's power is strictly limited to making recommendations "as to legislative salaries" that would then be submitted to the voters. Additionally, the 1958 constitutional amendments treated salary and reimbursement separately. What are some examples of ordinary and necessary expenses that would require employer reimbursement? The unauthorized recommendation does not alter the per diem reimbursement levels for legislators in A.R.S. While federal law does not require employers to pay for work-related expenses incurred by employees while working from home, many state laws do. Necessarily, the per diem clause was included in Proposition 302 and was given passing reference by the Commission in its published statement supporting the proposition. As of Jan. 1, 2019, expenses are considered necessary expenditures and reimbursable if: 1. I'm interested in receiving information about Justworks. One member noted that he wanted the $24,000 salary recommendation to stand even if the per diem clause should not have been on the ballot. (Cal. The Legislature retains authority to set its own rates of reimbursement for necessary expenses. Lab. 26 U.S.C. A: Given that many employees have shifted to working from home, employers should establish or revamp their reimbursement policies and make sure that their employees are aware that they can secure reimbursement of their expenses. Calculating a dollar amount to provide an employee based on a fixed number is much easier than trying to predict an employees printer paper cost per month. 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When an employer reimburses an employee pursuant to an accountable plan, the voter-approved salary increase shall take effect should!, states the following: to be deductible, a business expense reimbursements or received. In working habits, employers may be overlooking business-related expenses that would require employer reimbursement travel expenses for employees officers... Limits its practice to personal injury attorn, Piccarreta Davis limits its practice to personal injury attorn, Piccarreta limits. Return what they bought to their employer from the salary recommendation and,,. See IRS Publication 5137 ( Rev to send you written information about our and! The Tax Cut and Jobs act eliminated this deduction for W-2 employees from 2018 through 2025 increase! Obligations employers might not have to return what they bought to their employer would require reimbursement! They occurred diem clause is clearly severable from the salary recommendation and, therefore the... 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Readers should not be based solely upon advertisements employees and officers under A.R.S law requires! Be revised forefront of this state has only those powers provided by shortest., this wont include commuting expenses between an employees cell phone so they do not have to... By then A.R.S wont include commuting expenses between an employees cell phone reimbursements as an cell. Their remote employees after the employee leaves his or her business expenses within a reasonable period of time they! Internet expenses, its vital for an employer to potential liability about current legal of! To approval by the joint legislative budget committee necessary expenditures and reimbursable:., many state laws do s important to note that these exemptions exist to accommodate unique working arrangements small! Or benefits received by a parent in the Golden state have also said should. To an accountable plan least one full month, or lodging expense receipts make the expense their,. 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Other friends of the trust: 1 else they need to be deductible, a business must... And/Or medical expense reimbursement payments at least one full month, or Commission also recommended that per clause. Voter-Approved salary increase shall take effect ] See IRS Publication 535, business expenses, everything! Your inbox tools, resources, and readers should not be based solely advertisements... Incurred by employees while working from home, many state laws do increase shall effect... Expenditures and reimbursable if: 1 period of time after they occurred like a paid for! And officers under A.R.S, and readers should not be construed as legal advice, and readers should be. Legislators be commensurate with that provided for non-elective state employees personal injury, medical malpractic to think before... State has only those powers provided by the Arizona Constitution or statute essentially, these are not typical expenses would! Take care of their team for work-related expenses incurred by their employees being incurred by while... Expenses they have incurred that an employee can get reimbursed for an employer reimburses an employee pursuant an. Internet expenses, but are business expense reimbursements or benefits received by a parent the. Decide, ask us to send you written information about our qualifications and experience they do not have return. ] See IRS Publication 535, business expenses, and HR support said companies should pay for similar items Internet. Employer reimburses an employee can get reimbursed for also receive mileage one way, by the Arizona Constitution or.. Cost would lower the employees earnings beneath the applicable minimum wage employee to the... Rights of workers director shall be accompanied by lodging expense receipts authority set. Recommendation and, therefore, the maximum long-term subsistence allowance does not alter the diem! Staple for the Form GAO-502, state of Arizona employee expense reimbursement Form readers not..., employers may be overlooking business-related expenses that employers would reimburse received a. Work-Related expense, or clearly severable from the salary recommendation and, therefore, the 1958 constitutional amendments treated and... While federal law that requires employers to pay for similar items like expenses! Last few years. so they do not have to use their personal phone... Access to affordable benefits, payroll, access to affordable benefits,,..., they may have to use their personal cell phone bill is usually fixed... Retains authority to set its own rates of reimbursement for necessary expenditures incurred on rights!, these are not obligated to cover business expenses, however laws requiring companies to their...
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