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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 employer should consider implementing an employee business expense reimbursement policy.

Customizable Policy