Compliance

Accountable Plan

Rice University Policy states that expenses should be submitted within 30 days of being incurred.

In accordance with IRS Publication 463, Rice University follows the IRS rules for an accountable plan to ensure business expenses are not treated as taxable income to employees.

Per the IRS, employees must reconcile and submit their expense transactions within 60 days of incurring the expense. Transactions which are submitted after 60 days are considered taxable income and are subject to tax withholding. Timely reconciliation of expense transactions is the responsibility of the employee, whether self-submitted or submitted by a delegate.

Under an IRS accountable plan, your expense is only nontaxable to you if it meets all of these requirements:

• Your expense has a business connection.
• You adequately account for an expense within 60 days after it was incurred.
• You return any excess reimbursement to your employer within a reasonable time (typically 120 days).

Imputed Income

What is Imputed Income?

If expense transactions are not reconciled within 60 days, the IRS views these late expense transactions as a “benefit” that an employee receives. The amount of the “benefit” is considered taxable income, subject to tax withholding and reported on your;Form W-2. Your net pay in the appropriate pay period will be reduced by the tax withholding related to the “benefit.”

For example, if you have a $1,000 plane ticket for a trip that ended June 30, but don’t reconcile and submit it until November 30, tax withholding will be deducted from your December 15 pay and you will show an additional $1,000 on your W-2 income at year-end.

How Do I Avoid Imputed Income?

You should reconcile and submit expense transactions within 30 days of incurrence per Rice University policy. To avoid imputed income, expense transactions must be submitted no later than 60 days of incurrence. If a report is returned and not resubmitted within this window, it will be subject to imputed income. Employees are encouraged to reconcile their transactions well before 60 days to allow time for review and approval.

When were my expenses incurred?

• PCard expenses (non-travel): incurred when the expense is charged to the card.
• Out of pocket (non-travel): incurred as of the date of the receipt.
• Travel expenses: incurred upon the completion of the trip.

Exceptions

What Happens If I Miss the Deadline?

If PCard transactions are not reconciled and submitted by the deadline provided upon card suspension, the late transaction amount will be imputed as income.

Are there any Exceptions?

Exceptions are limited to documented, unavoidable circumstances, not including administrative oversight. Unavoidable circumstances include unexpected leaves of absence or documented delays in grant of external funding.

Exception Request Process: Written justification is required and must be approved by the Dean/VP or equivalent and Controller’s Office (Expenses Team). Attach the Exception Request Form to your late expense report upon submission.

• Note: Please attach approval documentation to the expense report PRIOR to report approval. Once income has been imputed, it is non-reversible.

Can I still submit expense reports after 60 days?

Yes, you are still required to submit your PCard charges; however, expenses reconciled or requested for reimbursement submitted 60 days after the expense was incurred will be treated as taxable income and reported on your W-2 and subject to tax withholding.

Do I have to submit within 60 business days or within 60 calendar days?

60 calendar days.

Will I receive reminders before this 60-day deadline?

• PCard Transactions: Reminders are sent every other week via the 30-day notification email. Cardholders receive a warning for expenses outstanding. If the PCard is suspended, submit expenses to avoid imputed income.
• Out-of-Pocket Expenses: No reminders are sent. Employees are responsible for submitting all out-of-pocket expenses within 60 days.

Can I track my submission date?

Employees can view real-time updates in the expense dashboard (Expense Report Approval Status) or by selecting ‘View Report History’ within their expense report in the Expense module.

Is there training for staff on this policy?

Yes. Please click here to enroll in the PCard Training or the Expenses Training.

Does this policy apply to the student PCard program?

No.

What if my report is selected for audit and returned for corrections?

Typical audit review occurs within 5 business days. ONLY expenses which require correction will be returned. These expenses must be corrected and re-submitted within the 60-day limit.

• Example: An expense report in audit has 20 transactions. Only one transaction requires correction and is returned for correction and resubmission. The remaining 19 transactions will be approved. If the corrected transaction is not resubmitted within the 60-day window, it will be imputed as income.

What if my expense report is stuck in pending manager approval status?

If your report is pending approval for an extended period, follow up with the report approvers to ensure timely approval.

What should approvers do to avoid issues?

Approve reports in a timely manner, delegate when out of office, and communicate required corrections immediately.

What if my expense is disputed?

Disputed PCard transactions must be disputed as soon as possible. If it appears that the dispute will push approval beyond 60 days, contact expenses@rice.edu before the 60-day window.

What if my expense is awaiting a refund?

Submit the expense report without the refund/credit and note that a refund is expected. When the refund/credit is received, use the same expense type and GL account as the original submission.

How do I apply for an exception?

Complete the Exception Request Form. Once the Exception Request Form has been approved by the Dean/VP, send to expenses@rice.edu for Controller’s Office Approval. Then attach the form within the expense report prior to report submission.

What is the submission requirement for Human Subjects expenses?

Expenses must be submitted within 60 days of fund disbursement. The Exception Approval Form is not required.

What if I am on leave?

Being on leave does not exempt you from compliance with IRS regulations. Work with your department to submit expenses within 60 days. If unexpected leave prevents timely submission, request a policy exception as discussed above.

Does this policy affect guest or student expense reimbursements?

No.

When will I be notified of the imputed income? How will I know the amount?

You will receive an email from expenses@rice.edu with the total amount and related expense report number. Payroll will provide confirmation once the income has been imputed.

When will the imputed income impact my pay?

It depends, but typically the amount will be reported and reflected in your pay within one to two pay periods after the notification.

Will this affect my benefits?

No.

Who do I contact for questions?

For questions regarding income which has been imputed, contact payroll@rice.edu. For expense policy/procedures, or inquiries regarding pending transactions, contact expenses@rice.edu.