Supplies that an employee purchases for business purposes can be reimbursed at cost, provided that they are reimbursed pursuant to an accountable plan. at 2(b). Several states have also enacted their own expense reimbursement laws that either meet or exceed the standard set forth in the FLSA. Employees should only have to pay income taxes on the wages they earn and certain taxable fringe benefits. Not doing so could subject an employer to potential liability. {W%iw QT4Ta C5,m= By accessing this site, you consent to the use of cookies and collection of personal information. That section and A.R.S. 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 . This distinction between salary and per diem reimbursement is not unique. In Mid-March, much of the nations workforce began working from home due to the COVID-19 pandemic. 928 0 obj <> endobj For 2023, the standard IRS mileage rates are: 65.5 cents per mile rate for regular business driving. (Cal. In addition, if any expenses are paid in excess of IRS limitations, then the excess is taxable income. 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. 180, 2 (currently codified at A.R.S. The voters approved Proposition 302 effective at the beginning of the next regular legislative session. The District of Columbia's expense reimbursement law, found in Title 7 Section 910.1 of the D.C. Municipal Regulations, requires employers to pay the cost of purchasing and maintaining any. The employee also must submit business expenses within a reasonable period of time after they occurred. Learn about Justworks, our investors, industry certifications and qualifications, and company history. Ct. 698 (2013). 5, 12. I'm interested in receiving information about Justworks. documentation doesnt exist, is missing or is lost. %PDF-1.6 % Id. art. 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). It should outline all of the business-related expenses that an employee can get reimbursed for. Copyright 2013-2023 Justworks, Inc. and its affiliates. Which states are at the forefront of this legislative So, are reimbursements taxable? Shouse Law Group has wonderful customer service. First, double-check if your own state has any laws or any legislation circulating that could lead to new rules in the near future. A: With employees having historically worked in an office environment, many of the supplies and resources they utilized to complete their job duties were provided for by the employer (i.e., printer paper, pens/pencils, computers, electricity, computer monitors, internet, phones, etc.) For example, California companies required to pay for employees cell phone bills now need to allot for this massive expenditure. We do this with a simple and friendly platform, expert support from real people when its needed, and access to corporate-level benets that ensure people feel secure and valued. For example, as demands on the Legislature have increased in recent years, legislative leaders have found it necessary to spend more time working at the Legislature than ever before. These are not typical expenses that employers would reimburse. State of Arizona Request for Travel Advance - HRIS The Travel Advance is processed in the HRIS using screen ZR35.2. Id. This approach is likely effective for employers in dealing with cell phone reimbursements as an employees cell phone bill is usually a fixed cost. But if you work in Illinois, state law now says employees can provide a signed statement if they lose a receipt. 41-1104. Magma Copper Co. v. Arizona State Tax Comm'n, 67 Ariz. 77, 86-87, 191 P.2d 169, 175 (1948). Code Ann. Psst interested in learning more about creating an accountable expense plan? 2. Download your free copy of Business Expenses: A Beginner's Guide To Building A Plan to find the helpful advice you're looking for. There is a certain expectation that if an employee uses their own money on the business's behalf, they should get reimbursed. Similarly, large portions of A.R.S. 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. Expense reimbursement lawsuits were already commonplace before the pandemic, and with no end in sight to the pandemic and employees working from home, employers can expect additional lawsuits to be filed. Courts in the Golden State have also said companies should pay for similar items like Internet expenses, data plans and other computing expenses. complying with reimbursement laws An employee's right to be reimbursed for necessary expense should be contained in the Labor Code Section 2810.5 notice. Sign up for our free summaries and get the latest delivered directly to you. endstream endobj 709 0 obj <>stream [11] California Labor Code 2802 LAB (An employer shall indemnify his or her employee for all necessary expenditures or losses incurred by the employee in direct consequence of the discharge of his or her duties). Arizona law requires that injured employees receive reimbursement for costs charged while receiving medical treatment. ,t\>C50 c?6s@mR 41-1104. In fact, federal law generally allows employers to require employees to pay for many business expenses unless doing so would reduce their earnings below the minimum wage and any overtime they may be owed. Premier client service, as outlined in the firm's Client Pledge, is one of the firm's top priorities and a cornerstone of its core values. 778.217 Reimbursement for expenses. The, must substantiate his or her business expenses. . Review SAAM . 41-1104.(1). 1= ( 4, pt.2, 1, (2)(a). 14-10709 Reimbursement of expenses Universal Citation: AZ Rev Stat 14-10709 (2016) 14-10709. Code. It did not mention the per diem clause. There are a few exceptions that you should know. The Commission hasnoauthority to venture into other areas, such as recommending that Arizona voters approve entering treaties with foreign countries, imposing new taxes, or altering legislative per diem rates. Most businesses reimburse such expenses, but are business expense reimbursements taxable income to the employee? As a nation, we have not yet found it sufficiently important to require reimbursement as a matter of law. Stat. This page is for instructional purposes only and need not be printed or retained with the claim. The only evidence of the electorate's intent is the language of the 1998 Publicity Pamphlet prepared by the Secretary of State. T5`(N[pTgV Keep in mind that some states, like California and Illinois, require employers to reimburse employees reasonable work-related expenses. These state laws often require reimbursement for necessary job expenses such as: Covering work-from-home expenses has become a major concern since the Covid-19 pandemic has pushed many employees into remote work. 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 employees. 41-1104). 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). Salary: $150,000 - $220,000 per year. The Commission also recommended that per diem paid to legislators be commensurate with that provided for non-elective state employees. 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. h233Q0Pw/+Q0L)63 )I0i1P *V? U? LawServer is for purposes of information only and is no substitute for legal advice. &_n*eoPh`#BADX JaJt0N94BQ>1Jfm!t 6-t(YdIe: h 41-1904(D). The unique manner in which Proposition 302 was developed requires review of the Commission's intent as well as the intent of the electorate to determine whether severance applies.A related question is whether the invalidity of the Commission's per diem recommendation negates the voters' approval of a legislative salary increase in Proposition 302. As if IRS regulations werent enough to keep up with, some states are adding their own expense reimbursement laws that your staffers will have to comply with, too. This can be tricky, however, as the employer must be sure to document/identify the amount of compensation attributable to the expense actually incurred. Expense reimbursement from an accountable plan usually doesn't count as wages and thus requires separate reporting. If an employer knows that an employee will regularly incur a certain business-related/work-related expense, it can choose to increase that employees salary to cover the costs of those expenses. An expense does not have to be indispensable to be considered necessary.. Check out our online talks on topics that matter most when protecting your business and taking care of your team. Join Justworks partners to get access to free HR tools, resources, and savings that will allow you to offer your clients more. Ct. 698 (2013). Section 39-2-701(1)). You can explore additional available newsletters here. C. However, because of the new normal of working from home, employers must vigilantly analyze the types of expenses their employees are incurring for business-related purposes and provide reimbursement accordingly. However, a key to maintaining any accountable plan is to properly and timely substantiate expenses. Lastly, you know these new business expense reimbursement laws could impact your budgets going forward. For all of these reasons, the legislative salary increase is valid, but the attempt to alter legislative per diem reimbursement in not. %PDF-1.4 % 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. 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. Learn more about IRS rules and accountable reimbursement plans. 4, pt. J+cQR! Expenses that were properly incurred in the administration of the trust. 2023 LawServer Online, Inc. All rights reserved. Justworks keeps you informed on employment regulations while taking care of your employer payroll tax filings. 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. SeeHistorical Note, ARIZ. CONST. 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. Pt.2, 1, ( 2 ) ( a ) is for purposes of information and. D ) fixed cost should only have to pay for similar items like Internet expenses data... Considered necessary that injured employees receive reimbursement for costs charged while receiving medical treatment expense reimbursement from accountable.: $ 150,000 - $ 220,000 per year are paid in excess of IRS limitations, then the excess taxable. The beginning of the 1998 Publicity Pamphlet prepared by the Secretary of state injured receive... 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