Finance departments everywhere have just been handed an incentive to dangle in front of employees to get those expense reports in faster.
And it comes courtesy of an unlikely source: the U.S. Tax Court.
The court recently ruled that an employee couldn’t claim business travel expenses on his personal tax return … even though he was never reimbursed by his employer for them. Which means it’s even more critical folks turn in those receipts and reports pronto. Otherwise they won’t be able to get their money back.
Check out the specifics of this ruling and how you can turn it to your company’s advantage to boost T&E compliance.
Never got around to turning in expense reports
The employee in this traveled for business, racking up expenses for overnight lodging, meals and parking fees.
Only problem was, he never got around to submitting expense reports for some of them. (Sound familiar?)
No problem – he decided to simply claim them as a deduction on his personal tax returns.
But the IRS disallowed the deductions. When the case reached the tax court, he got a shock: The court agreed those expenses could not be reimbursed.
The reasoning? Those expenses could have been reimbursed under his company’s T&E policy. Just because he failed to do so didn’t mean he could write them off later.
While this ruling can’t be considered precedent, it does give you a good idea what the current attitude is on the subject.
Passing this case along to employees may just be the fire you need to light under folks to get more expense reports in completely and promptly.
Cite: U.S. Tax Court Summary Opinion 2012-61, 6/26/12.