posted March 16, 2017
Allowable Travel Meal Expenses
by Cynthia Rojo, CPA, Senior Associate
Several questions often arise when processing travel reimbursements: Was it an overnight trip? Where did the employee travel to? Were any meals provided at hotels and/or conferences? What is our policy on receipts? Once all these questions are answered, you are then ready to look at applicable policies and allowable reimbursement rates and determine how much reimbursement can be paid to an employee.
An area of the State of Arizona Accounting Manual (SAAM) that has been going through policy revisions (most recently on January 30, 2017) is Section 5025 on reimbursable meals and incidentals. According to the SAAM, an employee may be reimbursed for meals and incidentals when on travel status. Travel status occurs when an employee travels more than 50 miles from both the traveler’s residence and regular duty post on State business. Reimbursement guidelines are divided under three categories of travel days. The guidelines provided under each travel category include the following:
1. Day of departure and day of return when traveling involves overnight stays: An entity may reimburse an employee up to 75% of the full daily reimbursement rate of the destination.(Reimbursement rates are available at https://gao.az.gov/travel/welcome-gao-travel.)
- If the total actual meal expenses are less than 75% of the full rate, the lesser should be reimbursed.
- If a meal is provided at no additional cost on the day of departure or arrival, the provided meal reduces the allowable reimbursement of 75% by the meal type (breakfast, lunch or dinner) rate.
- The 75% rule is applicable regardless of the times of departure or arrival, the length of the travel day, or the number of meals purchased and consumed.
2. Travel days that are not the day of departure or return: An entity may reimburse employees up to the full-day reimbursement rates established by ADOA.
- The lesser of actual meal expenses or applicable full day rate should be reimbursed.
- Total actual meal expenses up to the reimbursement rate qualifies whether that amount was spent on three meals, two meals or one meal.
- The full-day allowable reimbursement rate should be reduced by meals provided at no additional cost.
3. Travel days not involving an overnight stay: Meal expenses reimbursed to an employee when a travel day does not involve an overnight stay should be treated as a taxable benefit to the employee.
- The amount of reimbursement is restricted to the single day meal reimbursement limit of $13 and extended day meal reimbursement limit of $20.(https://gao.az.gov/sites/default/files/5095%20Reimbursement%20Rates%20161205.pdf)
- The single day meal reimbursement limit applies when the traveler has been in travel status 6 or more but fewer than 12 consecutive hours.
- The extended day meal reimbursement limit applies when the traveler has been in travel status 12 or more consecutive hours.
- The single and extended day meal reimbursement limits are reduced by any meals provided to the traveler at no additional cost.
- For meals provided at no additional cost, the meal reimbursement rates for Phoenix, AZ, are used to reduce the single or extended day meal reimbursement amounts, regardless of where the meal is provided.
A common requirement in the three travel categories is that the maximum daily meal reimbursements should be deducted by any meals provided to the employee at no additional cost. A meal provided between 12.01 and 10:00 am is deemed to be breakfast and the amount allowed for breakfast should be deducted. A continental breakfast or similar meal served at a conference or provided at a lodging establishment at no cost constitutes a meal whether or not it contains protein and no breakfast reimbursement will be allowed when such meals have been provided. A meal provided between 10:01 am and 2:00 pm is deemed to be lunch and the amount allowed for lunch is to be deducted. Meals provided between 2:01 pm and 12:00 midnight is deemed to be dinner and the amount allowed for dinner is to be deducted.
These are just a few policies to keep in mind when processing travel reimbursements. Keep in mind that receipts are not required per ADOA’s guidelines but may be needed according to your entity’s travel policy. In addition, the current reimbursement rates and additional travel guidance is available through the Arizona Department of Administration (ADOA) website as part of the State of Arizona Accounting Manual (https://gao.az.gov/publications/saam).School districts also refer to the USFR and FAQs issued by the Office of the Auditor General (https://www.azauditor.gov/reports-publications/school-districts/faqs/travel).
The content of these pages is for general information purposes only and does not constitute advice. Heinfeld, Meech & Co., P.C. tries to provide content that is true and accurate as of the date of writing; however, we give no assurance or warranty regarding the accuracy, timeliness, or applicability of any of the contents.