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Employee Business Expense Reimbursement Policy

Author: William Hays Weissman, Littler

When to Use

Employees who travel on business for their employer or entertain for business reasons incur expenses for which they may be reimbursed on a tax-free basis under IRS regulations.

However, not all business expenses may be reimbursed tax-free, and even reimbursements that are normally tax-free may become subject to withholding for federal income tax, Social Security and Medicare taxes and federal unemployment tax if employees do not substantiate their expenses within a reasonable time as required by the regulations.

To maintain reasonable limits on these expenses and ensure legal compliance, an employee business expense reimbursement policy should be in place.

Customizable Policy