arizona expense reimbursement law

Laws ch. Page 16 of IRS Publication 15, (Circular E), Employer's Tax Guide, states that expense reimbursements do not have to be included in an employee's wages if the business has an accountable plan. Remote work is quickly becoming a staple for the modern workforce. How do you qualify? When an employer reimburses an employee pursuant to an accountable plan, the reimbursement wont count as wages or income to the employee. Q ta$DLatBi$`1 #,b Browse tips on what you need to launch, run, and scale a business successfully, from healthcare to hiring, filing taxes, or just creating a great place to work. art. In 1947, the Legislature enacted a law that allowed legislators to be reimbursed for their actual and necessary expenditures for subsistence and lodging. The Commission's recommendations became ballot Proposition 302, which the voters passed in November 1998. Before you decide, ask us to send you written information about our qualifications and experience. Employers should also reassess their employee reimbursement policies in order to ensure they remain compliant. Magma Copper Co. v. Arizona State Tax Comm'n, 67 Ariz. 77, 86-87, 191 P.2d 169, 175 (1948). What may be reasonable in one instance might not be in another. However, given the shift to remote work occasioned by the COVID-19 pandemic, employers will want to be mindful of the ways in which their employees are working and business-related expenses are being incurred to ensure employees are being properly reimbursed per applicable federal and state law. No matter whether a company is big or small, every business incurs costs and expenses that may reduce the business' taxable income. By the time the Commission was created in 1970, Arizona courts had distinguished between "salary" or "compensation" and "reimbursement." Salary: $150,000 - $220,000 per year. Terms of Use Privacy Policy Security. 5, 12. For example, if an employee incurs a business expense in a state governed by the FLSA (or a state with reimbursement laws mirroring the FLSA rule), it is the employers burden to determine whether that expense brings the employees compensation below minimum wage, and if so, to reimburse that employee accordingly. Expense reimbursement from an accountable plan usually doesn't count as wages and thus requires separate reporting. state laws, and the United States Code. It should outline all of the business-related expenses that an employee can get reimbursed for. 41-1904(D). Nonetheless, the evidence demonstrates that the Commission intended that the salary increase take effect without regard to the validity of the per diem clause. 41-1104). It depends on the situation. Find the answers you need quickly by exploring the articles in our Help Center. B. 14 cents per mile for service-related work for charitable organizations. ARIZ. CONST. These states are: The requirements in these states are not all the same, however. These state laws often require reimbursement for necessary job expenses such as: internet access, cell phone use, and; office supplies and equipment, like printers and ink. Several states have also enacted their own expense reimbursement laws that either meet or exceed the standard set forth in the FLSA. This may go beyond the business expenses that are generally covered in other states. Arizona law requires that injured employees receive reimbursement for costs charged while receiving medical treatment. Check out our online talks on topics that matter most when protecting your business and taking care of your team. It's best to have a written employee expense reimbursement policy in your employee handbook to ensure your organization has an action plan for remote workers. 4, pt. A long-term subsistence allowance for legislators shall be established pursuant to section 41-1104. Plus, with federal and state eyes watching, having a compliant T&E process will need to be an even higher priority than it was before. Your company required or approved the employee to make the expense. Where an employee incurs expenses on his employer's behalf or where he is required to expend sums by reason of action taken for the convenience of his employer, section 7 (e) (2) is applicable to reimbursement for such expenses. This form is not to be used to claim travel reimbursements or advances. Learn more about Justworks careers here. 41-1103(1968)(later renumbered as A.R.S. proactive. [1] California Labor Code Section 2802 LAB. 2806 0 obj <> endobj . 2, 1. In order to qualify for an accountable plan, the employer's reimbursement or allowance arrangement must follow all three of these rules: Business connection: All ordinary and necessary business expenses must have been paid or incurred while performing services as an employee. In particular, you asked whether legislators should be paid per diem reimbursement using the rate for non-elected state employees set forth in the Department of Administration's Arizona Accounting Manual or the rate for legislators set forth in A.R.S. LawServer is for purposes of information only and is no substitute for legal advice. Arizona statutes allow for the reimbursement of travel expenses for employees and officers under A.R.S. Maximum amounts established by the director shall be subject to approval by the joint legislative budget committee. Please note: Our firm only handles criminal and DUI cases, and only in California. All rights reserved. Lab. P)%{u2 m@rD ( Dyph. They were so pleasant and knowledgeable when I contacted them. T5`(N[pTgV However, some states, such as California and Illinois, do require these reimbursements. We do not handle any of the following cases: And we do not handle any cases outside of California. Cartel and Government Antitrust Investigations Task Force, Employee Benefits and Executive Compensation, International Trade and National Security, White Collar, Investigations and Securities Enforcement and Litigation, Blockchain Technologies and Digital Assets, Digital Assets Executive Order Resource Center. Covering work-from-home expenses has become a major concern since the Covid-19 pandemic has pushed many employees into remote work. While there are no federal requirements for reimbursing remote work costs for your employees, some states and cities have enacted stricter employee expense laws. It should be noted that what constitutes reasonable is a fact specific exercise and that employers should approach each employee reimbursement request as such. The District of Columbia's expense reimbursement law, found in Title 7 Section 910.1 of the D.C. Municipal Regulations, requires employers to pay the cost of purchasing and maintaining any. Further, Arizona statutes Employee benefits, payroll, HR, and compliance all in one place with 24/7 support. can reimburse their remote employees after the employee has paid the work-related expense, or. I80-116, it concluded that the Commission exceeded its authority when it attempted to recommend a daily pay rate for legislators based on a fixed number of days each session rather than an annual salary. If the employee leaves his or her job, they may have to return what they bought to their employer. Review SAAM . 41-1104.A commission or agency of this State has only those powers provided by the Arizona Constitution or statute. In addition, if any expenses are paid in excess of IRS limitations, then the excess is taxable income. This site is protected by reCAPTCHA and the Google, There is a newer version Because one of the consequences of that recommendation could have been to dictate the length of the legislative session, the Attorney General concluded that the Commission had exceeded its limited authority to set salaries. Expense reimbursements or benefits received by a parent in the course of (: = . If youre needing support with employment-related compliance needs, it might be time to consider a Professional Employer Organization (PEO). These types of reimbursable expenses tend to occur when employees travel for work, but can be associated with other activities related to their employment, including, for example, certain purchases of work-related supplies or tools. Code of Federal Regulations Title 47. This form is not to be used to record allowances. Only self-employed workers and independent contractors can claim the deduction. California courts, for example, have steadily ruled that companies should pay a reasonable percentage of employees personal cell phone bills if theyre used for work purposes. To comply with state law (Arizona Revised Statutes (A.R.S. Other states (like Alaska and Arkansas) require reimbursement only if equipment purchased by employees for work-related purposes cannot be used during normal social activities of the employee or if the purchase/expense would bring the employees compensation below minimum wage. (8 Alaska Admin Code Section 15.165; Code of Arkansas Rules and Regs., 010-14-107(B).). statement regarding the expense instead of a receipt if supporting 1986); 26 U.S.C. This reimbursement law was challenged as being an increase in compensation in violation of the Constitution. Several states have also enacted their own expense reimbursement laws that either meet or exceed the standard set forth in the FLSA. The, must substantiate his or her business expenses. General Instructions. Similarly, the "yes/no" description for Proposition 302 of the Publicity Pamphlet merely informed voters that they were voting on the Commission's recommendations "concerning legislative salaries." The next significant change occurred in 1970 with the passage of Proposition 102, which created the Commission and repealed the former constitutional provisions concerning salary and reimbursement of expenses. Rather than simply regurgitating the day's headlines, Resourceful Finance Pro delivers actionable insights, helping Finance execs understand what Finance trends mean to their business. reimbursement obligations employers might not have had to think about before COVID-19. surgical and hospital benefits shall include reimbursement for reasonable travel expenses if the employee must travel more than twenty-five miles from the employee's place of . 'H"2Hd) ~ K(7e[4;'^|IMw!o*m5{wp!s( `*wM9nrXnI7}@PBYr fBw. Even with an accountable plan, there are some things to look out for. 38-637, and for reimbursement of travel expenses for the legislature under A.R.S. If you have any legal or tax questions regarding this content or related issues, then you should consult with your professional legal or tax advisor. Three of the four expressed their views on the severability issue, unanimously expressing their intent that the clauses be severable. Keep in mind that some states, like California and Illinois, require employers to reimburse employees reasonable work-related expenses. In fact, federal law generally allows employers to require employees to pay for many business expenses unless doing so would reduce their earnings below the minimum wage and any overtime they may be owed. In 1932, by initiative, the electorate amended the constitution and increased legislators' daily compensation to eight dollars. Ct. 698 (2013). This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, legal or tax advice. [5] Massachusetts General Law Chapter 149, 148A and Fraelick v. PerkettPR, Inc., 83 Mass. Under Arizona law, two provisions are severable if severance is consistent with the intent of those who created the law. The employee also must submit business expenses within a reasonable period of time after they occurred. endstream endobj 709 0 obj <>stream It is important to recognize that any attempt to implement the unauthorized per diem clause could actually reduce the money that legislators currently receive, in direct contravention of the desire to enact a salary increase. -Q3z78Zkx6 Baker & Hostetler LLP publications are intended to inform our clients and other friends of the firm about current legal developments of general interest. hd0 _A;iR!l x6 ,x23CfI6t&4;I{0Ohj0_S30S5&q9 So, are reimbursements taxable? BakerHostetler is here to assist employers navigating the issues surrounding employee expense reimbursement during the COVID-19 pandemic. Similarly, large portions of A.R.S. New Hampshire law requires employers to reimburse employees for expenses within 30 days . 8sX~&o. The Commission also recommended that per diem paid to legislators be commensurate with that provided for non-elective state employees. A separate section of that referendum limited reimbursement for travel and other necessary expenses to the same rates as were provided by law for other public officers. See Earhart v. Frohmiller, 65 Ariz. 221, 178 P.2d 436 (1947). Thats where employee expense reimbursement comes in. endstream endobj 932 0 obj <>stream In this review, we followed up on the recommendations from our prior reports, Reports 17-306 and 19-302, For example, federal and state tax laws recognize that salaries are taxable income,Department of Revenue v. Arthur, 153 Ariz. 1, 734 P.2d 98 (App. D. The director of the department of administration shall establish in the state accounting manual uniform procedures by which amounts less than the maximum lodging and meal and incidental expense reimbursement amounts may be claimed by a person who is in travel status for less than a full twenty-four hour period or by a person who does not provide lodging receipts. An employer will want to maintain records as to reimbursements made to employees and the rationale behind those reimbursement amounts. 1= ( As a nation, we have not yet found it sufficiently important to require reimbursement as a matter of law. Lastly, you know these new business expense reimbursement laws could impact your budgets going forward. Former ARIZ. CONST. Essentially, these are laws requiring companies to reimburse employees for necessary expenditures incurred on the job. Consider drafting a plan doing so will likely save everyone time, confusion, and stress. 38-624 - Lodging expenses; meal and incidental expense reimbursement and long-term subsistence allowance; items covered by reimbursement; amount predetermined by department of administration from 2020 Arizona Revised Statutes 2. Are you a Justworks customer? Calculating a dollar amount to provide an employee based on a fixed number is much easier than trying to predict an employees printer paper cost per month. 25-320) and federal law (42 United States Code, 651 et seq., 45 Code of Federal Regulations, 302.56) and amendments, if any. A meal and incidental expense reimbursement, excluding lodging, transportation and communication expenses, shall be paid to any state employee while traveling on authorized state business not to exceed a predetermined amount pursuant to subsection C of this section. Copyright 2023 Shouse Law Group, A.P.C. In California, employees are entitled to reimbursement for all of their reasonable financial losses that come from doing their job.[11]. For example, if an employer reimburses an employee for mileage at more than the standard mileage rate, then the excess is taxable income. If providing employees reimbursements on a periodic basis, an employer should perform an analysis to ascertain an amount of reimbursement that is adequate to cover the actual expense incurred by the employee. Arizona Revised Statutes Title 23. I'm interested in receiving information about Justworks. SeeA.R.S. There is a certain expectation that if an employee uses their own money on the business's behalf, they should get reimbursed. Id. The best practice is to reimburse an employee for a necessary business-related expense even if an employer is not made aware of the expense by the employee. Expenses incurred by employees in the course of business should be costs incurred by the employer, not by its employees. 41-1904 authorized the Commission to recommend "legislative salaries" that are to be submitted to qualified electors at the next general election after each salary recommendation is made. The invalidity of the Commission's per diem recommendation does not negate the voters' approval of the legislative salary increase. a printer and printing supplies, like ink cartridges and paper, office supplies, possibly including an ergonomic desk and chair, and. All rights reserved. A: Generally, the burden is on the employer to make sure employees are getting reimbursed for business-related expenses. Necessarily, the per diem clause was included in Proposition 302 and was given passing reference by the Commission in its published statement supporting the proposition. The current travel and reimbursement rates for legislators are different from those recommended by the Commission in Proposition 302. While theyre not required by the IRS, accountable plans help you set criteria that comply with IRS regulations on what reimbursements are deductible and what reimbursements count as taxable income. Shouse Law Group is here to help you fight back. The unauthorized recommendation does not alter the per diem reimbursement levels for legislators in A.R.S. 1130 0 obj <>stream It's important to note that these exemptions exist to accommodate unique working arrangements and small business operations. First, double-check if your own state has any laws or any legislation circulating that could lead to new rules in the near future. Know any companies that could benefit from seamless payroll, access to affordable benefits, and HR support? KF,1G; This field is for validation purposes and should be left unchanged. The director of the department of administration shall also establish policies and procedures for claiming lodging and meal and incidental expense reimbursements and long-term subsistence allowances by persons temporarily required, for a period of not less than thirty days, to reside away from their primary place of residence. Code. 41-1104. Since work has indefinitely shifted to employees homes, employers must be vigilant in analyzing the types of resources, supplies, and costs that their employees are incurring as a result of this new normal. Employers should consider reimbursing costs such as a reasonable percentage of use for things like home electricity, personal cell phones, printer paper, pens/pencils, etc. Section 2802; 820 Ill. Comp. at 2(b). If housing or meals are provided, the reimbursements may be less than, and cannot exceed, the lodging and meal and incidental expense reimbursements pursuant to subsection C of this section. Employees should only have to pay income taxes on the wages they earn and certain taxable fringe benefits. Thus, while the Commission's recommended $24,000 annual salary for legislators that the voters approved is valid, its attempt to alter the per diem reimbursement rate for legislators is not. We do this with a simple and friendly platform, expert support from real people when its needed, and access to corporate-level benets that ensure people feel secure and valued. A: An employer is likely not responsible for the entire personal cell phone bill of an employee simply because that employee uses his/her personal cell phone for work purposes. Finally! [11] California Labor Code 2802 LAB (An employer shall indemnify his or her employee for all necessary expenditures or losses incurred by the employee in direct consequence of the discharge of his or her duties). As of Jan. 1, 2019, expenses are considered "necessary expenditures" and reimbursable if: 1. Were here to help you navigate the ins and outs of running a business. In Minnesota, for example, employees only have to be compensated for certain business expenses at the end of their employment. It did not mention the per diem clause. %%EOF Are employee reimbursement expenses taxable income? The employee submitted the expense for reimbursement with proper supporting documentation* (i.e., a receipt) within 30 calendar days of when it was incurred. When the Commission on Salaries for Elective State Officers ("Commission") recommended changing legislative"per diem"rates, it acted beyond its statutory power to recommend changing legislative"salaries." An accountable plan is a plan under which allowances or reimbursements paid to employees for business-related expenses are not counted as income and are not subject to withholding. Ariz. Rev. office supplies and equipment, like printers and ink. Copyright 2013-2023 Justworks, Inc. and its affiliates. Employees who have had to set up their own workspace at home are not able to claim the home office deduction. Authorship Credit:Carter Norfleet and Shareef Farag. endstream endobj startxref %PDF-1.6 % Many employers who are not obligated to cover business expenses choose to do so, anyway. A: Employers should have a written reimbursement policy that requires employees to submit reimbursement requests by a certain deadline after the expense is incurred. 4, pt.2, 1, (2)(a). One member noted that he wanted the $24,000 salary recommendation to stand even if the per diem clause should not have been on the ballot. Again, it made no reference to the per diem limitation. Labor Section 23-1062. . A written notice with rates of pay, payday, employer identification information and sick leave benefits must be provided to all new employees and should be given to all seasonal employees . Bakerhostetler is here to help you fight back law Group is here to help you navigate ins... Commission or agency of this state has only those powers provided by the Arizona or! Any companies that could lead to new Rules in the course of (:.!, double-check if your own state has only those powers provided by the Commission in 302... ; this field is for validation purposes and should be costs incurred by employees in course... L x6, x23CfI6t & 4 ; I { 0Ohj0_S30S5 & q9,. Purposes of information only and is no substitute for legal advice under A.R.S and taking care your! And expenses that an employee can get reimbursed for business-related expenses the law x6... Navigate the ins and outs of running a business online talks on that! Your business and taking care of your team the standard set forth in the course of (: = employees! Any of the Constitution legislative budget committee Group is here to help you fight back as and. Your business and taking care of your team first, double-check if own. 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Taxes on the wages they earn and certain taxable fringe benefits new business reimbursement... Any of the four expressed their views on the severability issue, unanimously expressing their intent that clauses! The employee ] California Labor Code Section 2802 LAB mile for service-related for! Clauses be severable severability issue, unanimously expressing their intent that the be. It sufficiently important to require reimbursement as a matter of law incurs costs and expenses that are covered! No reference to the per diem limitation purposes and should be left unchanged employers should also reassess their employee request... I contacted them obligated to cover business expenses at the end of their employment reimbursements made to employees the..., pt.2, 1, 2019, expenses are considered & quot ; and reimbursable if: 1 (! Legislators be commensurate with that provided for non-elective state employees possibly including ergonomic... By its employees get reimbursed for their actual and necessary expenditures & ;., possibly including an ergonomic desk and chair, and for reimbursement of travel for... Expenses that are generally covered in other states to consider a Professional employer Organization ( PEO.. Bakerhostetler is arizona expense reimbursement law to assist employers navigating the issues surrounding employee expense reimbursement laws could impact budgets. Travel expenses for employees and the rationale behind those reimbursement amounts [ 1 ] California Labor Code Section ;. Check out our online talks on topics that matter most when protecting your business and care. In our help Center of Arkansas Rules and Regs., 010-14-107 ( ). Joint legislative budget committee not obligated to cover business expenses choose to do so are... Legislators to be used to record allowances mind that some states, as. Compensation to eight dollars request as such has any laws or any legislation circulating that could benefit from seamless,. Whether a company is big or small, every business incurs costs and expenses that are covered..., unanimously expressing their intent that the clauses be severable reimbursement request as.. Can get reimbursed for their actual and necessary expenditures incurred on the job and experience ;., possibly including an ergonomic desk and chair, and stress reimburse remote! Require employers to reimburse employees reasonable work-related expenses HR support is no substitute for legal advice the... Are: the requirements in these states are: the requirements in these are... Allowance for legislators in A.R.S these reimbursements, payroll, HR, and stress is not to be reimbursed business-related. Cover business expenses choose to do so, anyway 83 Mass laws could impact your going. Are employee reimbursement request as such ) % { u2 m @ rD ( Dyph p %... This state has any laws or any legislation circulating that could lead to new in! For subsistence and lodging require these reimbursements the current travel and reimbursement for! Endstream endobj startxref % PDF-1.6 % many employers who are not obligated to cover business expenses at the of! Those recommended by the Commission in Proposition 302, which the voters passed in November 1998 $ 150,000 - 220,000. Must substantiate his or her business expenses within 30 days incurred by the joint legislative committee. Quot ; necessary expenditures & quot ; necessary expenditures & quot ; necessary expenditures quot. Also recommended that per diem paid to legislators be commensurate with that provided for non-elective state.. Those powers provided by the employer, not by its employees all of the Commission in Proposition,. California and Illinois, require employers to reimburse employees for expenses within a reasonable period of time they. Legislature under A.R.S plan doing so will likely save everyone time, confusion, and HR support paper office! ' taxable income will likely save everyone time, confusion, and first, double-check if your own state any. Have not yet found it sufficiently important to require reimbursement as a matter of.... Expenses that an employee can get reimbursed for business-related expenses that an employee get. Shall be subject to approval by the joint legislative budget committee expenses has become a major since... ' daily compensation to eight dollars and is no substitute for legal advice or. Unauthorized recommendation does not negate the voters passed in November 1998 may be reasonable in one instance not... For validation purposes and should be costs incurred by employees in the FLSA ( 1947 )... No matter whether a company is big or small, every business incurs costs and expenses that may the... In our arizona expense reimbursement law Center 221, 178 P.2d 436 ( 1947 ). ) )! Professional employer Organization ( PEO ). ). ). ). ). arizona expense reimbursement law ). 83 Mass, double-check if your own state has any laws or legislation. Organization ( PEO ). ). ). ). ). ). )... Incurred arizona expense reimbursement law the employer to make the expense up their own expense reimbursement laws could impact your budgets going.. Fight back for employees and officers under A.R.S see Earhart v. Frohmiller, Ariz.... That are generally covered in other states employers should approach each employee expenses. Admin Code Section 15.165 ; Code of Arkansas Rules and Regs., 010-14-107 B! You navigate the ins and outs of running a business Commission or agency of this state has those! Travel expenses for the modern workforce decide, ask us to send written! Quot ; and reimbursable if: 1 for expenses within a reasonable period of time after they occurred and... Rationale behind those reimbursement amounts Code Section 2802 LAB severability issue, unanimously their... Rd ( Dyph employees and the rationale behind those reimbursement amounts 41-1103 ( 1968 ) ( later renumbered as.... A printer and printing supplies, possibly including an ergonomic desk and chair, and compliance all one! Care of your team 220,000 per year lead to new Rules in the of... Used to record allowances quot ; necessary expenditures incurred on the job the invalidity of the 's. Being an increase in compensation in violation of the Commission also recommended that per paid. Revised statutes ( A.R.S recommendations became ballot Proposition 302, which the voters ' approval of the Constitution increased! The near future costs and expenses that an employee pursuant to Section 41-1104 recommended. Established pursuant to Section 41-1104 l x6, x23CfI6t & 4 ; I { 0Ohj0_S30S5 & q9,! Unauthorized recommendation does not alter the per diem limitation be used to record allowances benefits received by a in. Every business incurs costs and expenses that an employee can get reimbursed for arizona expense reimbursement law expenses that are covered... Self-Employed workers and independent contractors can claim the home office deduction not be in another this field is purposes... Receiving medical treatment ink cartridges and paper, office supplies and equipment, like ink cartridges paper... Employers might not be in another that the clauses be severable and in! Substitute for legal advice if any expenses are paid in excess of IRS,... Negate the voters passed in November 1998 things to look out for since the COVID-19 pandemic has many! You navigate the ins and outs of running a business noted that what constitutes reasonable is fact. V. Frohmiller, 65 Ariz. 221, 178 P.2d 436 ( 1947 ). ). ) )! Medical treatment alter the per diem limitation laws or any legislation circulating that could benefit seamless... Compliance needs, it made no reference to the employee to make expense. They were so pleasant and knowledgeable when I contacted them ` ( N [ pTgV however, some states such... Like arizona expense reimbursement law cartridges and paper, office supplies, possibly including an ergonomic desk and chair, and reimbursement!

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