To: All Faculty & All Academic Professionals & All Civil Service Staff
           <everybody@illinois.edu> 
    From: "Office of Business and Financial Services" <obfs@uillinois.edu>

Reply-To: obfs@uillinois.edu
 Subject: MASSMAIL - 60-Day Policy for Reimbursements on Jan. 3, 2006

The 60-day requirement for submittal of employee reimbursement requests 
will take effect January 3, 2006. In compliance with IRS regulations, a 
business expense reimbursement to an employee may be considered taxable 
income to the employee if the request for the reimbursement is not 
received by University Payables within 60 calendar days of:

--the last date of travel (for travel reimbursements), or
--the date the business expense was paid or incurred (for miscellaneous 
expense reimbursements)

The 60-day requirement will apply to reimbursement requests received by 
University Payables on or after January 3, 2006.  This means that 
reimbursement requests received on January 3 for expenses incurred, or 
travel that ended, on or before November 4, 2005, will be considered 
taxable income to the employee.

If a reimbursement is considered taxable income to the employee, the 
reimbursement is paid in full but reported to University Payroll as 
additional income to the employee.  Consequently, tax withholding of 
approximately 30% will be applied to the amount of the reimbursement and 
deducted from one of the employee's following payroll payments.  For 
example, employee J. Doe needs to claim a business travel reimbursement of 
$2,000 for a trip that ended on October 31, 2005, but waits until January 
5, 2006 (66 calendar days) to submit the reimbursement request to 
University Payables.  The reimbursement will be paid in full but reported 
to University Payroll as additional income to J. Doe.  Consequently, tax 
withholding of approximately $600 (30% of $2,000) will be deducted from 
one of J. Doe's following payroll payments.  If J. Doe's net earnings were 
typically $5,000, J. Doe would see a one-time reduction in his/her net pay 
to $4,400 ($5,000 - $600). 

University Payables recognizes that there are special circumstances when 
it is impossible to submit a reimbursement request within the required 60 
days.  In these cases, a justification for an exception must be approved 
by the unit head and submitted with the request to University Payables for 
final approval. 

Additional information on this policy is available in Section 15.1 of the 
OBFS Policies and Procedures manual, at:
<http://www.obfs.uillinois.edu/manual/central_p/sec15-1.html

If you have questions please contact the Office of University Payables at 
217-333-0780 or OBFSUPAY@uillinois.edu.

Sandy Ehler
Executive Director of University Payables

This mailing approved by:
The Office of the President

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