Expenses incurred by employees in the course of business should be costs incurred by the employer, not by its employees. %PDF-1.6 % art. Get free summaries of new opinions delivered to your inbox! 26 U.S.C. [2] D.C. Municipal Regulation Title 7, Section 910.1. Mr Shouse has been recognized by the National Trial Lawyers as one of the Top 100 Criminal and Top 100 Civil Attorneys. What Counts as Employee Business Expenses? As a result, many employers had to rapidly adjust to utilizing a virtual workforce. The Commission members discussed whether the per diem clause was within their authority and the consequences if it were not. Baker & Hostetler LLP publications are intended to inform our clients and other friends of the firm about current legal developments of general interest. Id. See1968 Ariz. Sess. See Earhart v. Frohmiller, 65 Ariz. 221, 178 P.2d 436 (1947). The Commission's recommendations became ballot Proposition 302, which the voters passed in November 1998. If the employer establishes a written accountable plan, and the employees submit properly documented expenses under that plan, then the reimbursements shouldnt count as taxable income. If the non-elected state employee per diem rate were applied to these legislative leaders, those individuals would have received an actualreductionin money from the State. Learn more about IRS rules and accountable reimbursement plans. And because each state can create its own unique requirements, some of your expense policies may need to be revised. Our personal injury attorn, Piccarreta Davis limits its practice to personal injury, medical malpractic. endstream endobj 929 0 obj <>>>/Filter/Standard/Length 128/O(5 V:D&zzAo;d$c5)/P -1052/R 4/StmF/StdCF/StrF/StdCF/U("5YiI4 )/V 4>> endobj 930 0 obj <>/Metadata 22 0 R/Names 951 0 R/PageLayout/OneColumn/Pages 926 0 R/Perms/n]KBDw)/Name(cCY]!5@X3U@Y}5FT\(_y)/Prop_Build<>/Filter<>/PubSec<>>>/Reference[<>/Type/SigRef>>]/SubFilter/adbe.pkcs7.detached/Type/Sig>>>>/StructTreeRoot 34 0 R/Type/Catalog>> endobj 931 0 obj <>stream ,t\>C50 c?6s@mR 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. statement regarding the expense instead of a receipt if supporting Proposition 302 had its origins with the Commission. Employers should also reassess their employee reimbursement policies in order to ensure they remain compliant. 4, pt. Legislative reimbursement continued to be governed by then A.R.S. Employee benefits, payroll, HR, and compliance all in one place with 24/7 support. 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. Other jurisdictions that already have expense reimbursement laws on the books include: Generally, your department knows what typical business expenses states will expect to be reimbursed, like transportation, lodging, meals and entertainment. 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). A trustee is entitled to be reimbursed out of the trust property, with reasonable interest, for: 1. Former ARIZ. CONST. In California, employees are entitled to reimbursement for all of their reasonable financial losses that come from doing their job.[11]. 39-2-701. 3. 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. 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. For example, if an employer reimburses an employee for mileage at more than the standard mileage rate, then the excess is taxable income. By the time the Commission was created in 1970, Arizona courts had distinguished between "salary" or "compensation" and "reimbursement." For almost thirty years following the creation of the Commission, the Legislature continued to set its own reimbursement rates. 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. In addition, if any expenses are paid in excess of IRS limitations, then the excess is taxable income. Expenses that were properly incurred in the administration of the trust. Ann. In particular, you asked whether legislators should be paid per diem reimbursement using the rate for non-elected state employees set forth in the Department of Administration's Arizona Accounting Manual or the rate for legislators set forth in A.R.S. All rights reserved. For example, if an employee incurs a business expense in a state governed by the FLSA (or a state with reimbursement laws mirroring the FLSA rule), it is the employers burden to determine whether that expense brings the employees compensation below minimum wage, and if so, to reimburse that employee accordingly. Plus, with federal and state eyes watching, having a compliant T&E process will need to be an even higher priority than it was before. A.R.S. Please complete the form below and we will contact you momentarily. k6$ LPXDyA 2806 0 obj <> endobj How do you qualify? Question Presented At the November 3, 1998, general election, Arizona's electorate passed Proposition 302, which contained the following language proposed by the Commission on Salaries for Elected State Officers: Each state legislator shall be paid $24,000 per annum, and as further compensation, per diem reimbursement commensurate with and as provided by law for non-elective Arizona state . Some states (like California, Illinois, and Montana) have more robust reimbursement laws in that employers are required to reimburse employees for all necessary expenditures or losses or business expenses incurred by the employee in direct consequence or discharge of his or her duties. 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." 2. 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. *Note: Illinois says the employee can offer a signed Nonetheless, all three of the arguments in the Publicity Pamphlet regarding Proposition 302 focused exclusively on the salary clause. Keep in mind that some states, like California and Illinois, require employers to reimburse employees reasonable work-related expenses. 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. They shall also receive mileage one way, by the shortest practicable route, at the rate of twenty cents per mile." This reimbursement law was challenged as being an increase in compensation in violation of the Constitution. Even with an accountable plan, there are some things to look out for. Copyright 2013-2023 Justworks, Inc. and its affiliates. This form is not to be used to record allowances. 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. Justworks helps businesses with their benefits, payroll, and everything else they need to take care of their team. 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. A. Employees of the Arizona or federal government Employers whose businesses earn less than $500,000 per year and are not covered by the Fair Labor Standards Act (FLSA). In this review, we followed up on the recommendations from our prior reports, Reports 17-306 and 19-302, attorneys fees incurred by the employee in recovering reimbursement for other expenses. Maximum amounts established by the director shall be subject to approval by the joint legislative budget committee. 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. Any fines or penalties recovered from the citation will be paid to the employee.[12]. Most businesses reimburse such expenses, but are business expense reimbursements taxable income to the employee? Arizona Revised Statutes Title 23. 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. The arguments did not mention the per diem clause. 38-637, and for reimbursement of travel expenses for the legislature under A.R.S. KF,1G; [3] 820 Illinois Compiled Statute 115/9.5. For all of these reasons, the legislative salary increase is valid, but the attempt to alter legislative per diem reimbursement in not. Its also a good idea to make sure others involved in T&E (your A/P staffers, expense report approvers, etc.) Shouse Law Group has wonderful customer service. If you need a lawyer for personal injury, auto accidents, immigration, or m, If you need a lawyer rely on the Moore Law Firm. (2) The geographic area over which the court has authority to decide cases. 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). An expense does not have to be indispensable to be considered necessary.. Labor Section 23-1062. . Learn more about our compliance support. . (a) General rule. For example, California allows an employee up to three years to submit a reimbursement request. Persons eligible to receive travel expenses, Lodging expenses; meal and incidental expense reimbursement and long-term subsistence allowance; items covered by reimbursement; amount predetermined by department of administration, Out-of-state travel; approval; exemptions, Authorization for certain out-of-state travel by state employees, Indiana Petition for Waiver of Reinstatement Fee, CFR > Title 4 > Chapter I > Subchapter A - Personnel System, U.S. Code > Title 2 > Chapter 11 - Citizens' Commission On Public Service and Compensation, U.S. Code > Title 39 > Part II - Personnel, U.S. Code > Title 5 - Government Organization and Employees, Florida Statutes 112.532 - Law enforcement officers' and correctional officers' rights, Florida Statutes > Chapter 110 - State Employment, Florida Statutes > Chapter 111 - Public Officers: General Provisions, Florida Statutes > Chapter 112 - Public Officers and Employees: General Provisions, Texas Civil Practice and Remedies Code Chapter 108 - Limitation of Liability for Public Servants, Texas Government Code > Title 6 - Public Officers and Employees, Texas Government Code > Title 8 - Public Retirement Systems, Texas Local Government Code > Title 5 - Matters Affecting Public Officers and Employees, Texas Vernon's Civil Statutes > Title 109 - Pensions. As of Jan. 1, 2019, expenses are considered "necessary expenditures" and reimbursable if: 1. 62 (a)(2) and (c)(2); 1.62-2(c)(4). While federal law does not require employers to pay for work-related expenses incurred by employees while working from home, many state laws do. The most common are work-related supplies, travel, meals, and entertainment. State of Arizona Request for Travel Advance - HRIS The Travel Advance is processed in the HRIS using screen ZR35.2. Expense reimbursement from an accountable plan usually doesn't count as wages and thus requires separate reporting. Download your free copy of Business Expenses: A Beginner's Guide To Building A Plan to find the helpful advice you're looking for. 708 0 obj <>stream Further, Arizona statutes You will receive a link to create a new password via email. 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. 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 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. Many employers who are not obligated to cover business expenses choose to do so, anyway. Additionally, the 1958 constitutional amendments treated salary and reimbursement separately. 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