WVU-P&TS-3 Spousal Expenses Policy
West Virginia University Policy
Division of Administration and Finance
SPOUSAL EXPENSES POLICY
The purpose of this policy is to define when spousal; partner or guest travel, entertainment and meal expenses are taxable to the employee.
This policy applies to all University departments, including those on the regional campuses. This policy applies to expense reimbursements paid by the University or one of its affiliates whether paid directly to the employee or directly to a vendor by the department.
Reimbursement for spousal, guest, family member meals or partner meals, entertainment or travel expense (including air travel) is potentially taxable to employees under IRS Code Section 274(m)(3) and IRS Regulation 1.132-5(t). The spouse’s family members, guests or partner’s meals, entertainment or travel expense (including air travel) will not be taxable to the employee if both of the following conditions are met:
- Spouses, guest or partner presence has a bona fide business purpose and
- The employee substantiates the expenses.
‘Bona fide business purpose’ means the presence of the spouse, guest, family member or partner is ‘essential’ and not merely ‘beneficial’ to the employee being able to carry out his/her business purpose for the University. Spouse, guest or partner duties cannot be merely incidental to the business purpose. The spouse’s, guest, family member or partner’s performance of some incidental service does not make it a bona fide business expense. Spousal, guest, family member or partner accompaniment with an employee to luncheons or dinners is not a bona fide business purpose.
Examples of acceptable and bona fide purposes include:
a. A WVU employee is attending a meeting and the spouse, guest, family member or partner attends with the intention of actively participating for business purposes such as taking notes, minutes, presenting or outright advising during the meeting.
b. The spouse, guest, family member or partner’s attendance is considered a “necessary service” as a representative of the university. For example, a spouse, family member or partner is required to be in attendance of certain events, alumni/fundraising activities or ceremonies. This serves as a publicity and public relations function and is contributing to the mission of the University.
Examples of unacceptable spouse, guest, family member or partner meal purposes include:
a. A lunch meeting is conducted by the spouses, guest, family members or partners of University employees to discuss logistics of an event such as travel arrangements, parking, seating, etc.
b. Two professors, and their spouses, guest, family members or partners of the University meet once a week for lunch as a reoccurring event. A non-university employee was not present and there was never a bona fide business purpose established.
Employees seeking reimbursement of meal expenses for spouses, guest, family members or partners must submit substantiation with the reimbursement request, of documentation supporting and demonstrating the:
- Time and Date
Business relationship – Occupation or other information relating to the person or persons entertained, including name, title or other designation, sufficient to establish business relationship to the University.
Business Purpose – the business reason for the expense or nature of the business benefit derived or expected to be derived as a result of the expense. The business purpose must be ‘certain’ and ‘specific’. Documentation should clearly demonstrate the spouse, partner, guest function at the meeting or meal to be a function of significant value to the meeting.
Failure to meet these requirements will result in the determination of additional taxable income to the employee.
All expenses incurred and paid for spousal, guest, family member or partner travel (including air travel), meals and entertainment cannot be reimbursed from University funds if no business purpose is present. Regardless of the source of reimbursement of the expense the above requirements for documentation and business purpose are to be observed.
Procedure development rests with the Payroll & Tax Services Department of the Finance Division.
RESPONSIBILITY FOR IMPLEMENTATION
Employees engaged in business activities where their spouse, partner, or guest travel, have entertainment or meal expense are charged with providing full support to this policy. It is the responsibility of the Dean, Director or EBO to implement and maintain this policy within their college, department, or unit by approval of each request for reimbursement. Documentation of expenses is to be retained for a period of five years. Payroll & Tax Services, at 293-4002, is available to answer questions or provide additional information regarding this policy.
RESPONSIBILITY FOR INTERPRETATION
The responsibility for interpretation of this policy rests with the Director, Payroll & Tax Services -West Virginia University.
Effective Date: October 30, 2009
Approved By: Narvel G. Weese,Jr., Vice President for Administration and Finance