Sarah Chavez & Juliet RobertsTraining & Communication SpecialistsVPCFO Training & Communications

Out of Pocket Reimbursements

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Agenda• Allowability

• Employee reimbursement entry and tracking

• Supplier reimbursement entry and tracking

• Wrap up & resources

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Learning Objectives• Articulate whether a reimbursement is allowable as defined by the IRS

Accountable Plan.

• Determine which system, Chrome River or BUY.IU, should be used to issue a reimbursement.

• Complete an Out of Pocket Reimbursement report in Chrome River.

• Complete a Reimbursement for Supplier Out of Pocket Expense check request form in BUY.IU.

• Locate payment details for BUY.IU and Chrome River payments.

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One quick note:• This session focuses on out of pocket reimbursement

excluding travel reimbursements.

– Travel reimbursements for employees and nonemployees should be processed in Chrome River using the appropriate expense report.

– Check out the Return to Travel webinar series to learn more!

• Receipt requirements discussed are at the university level.

– If you’re working with grants, defer to the Office of Research Administration (ORA).

Allowability

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Purchasing hierarchyFirst: Purchase using a catalog or non-catalog order in BUY.IU.

Second: Purchase with P-Card and reconcile in Chrome River.

Last resort: Use personal funds and reimburse using appropriate system.

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Why are out of pocket purchases discouraged?

1. IU’s tax exemption cannot be used with personal funds.

2. Not all types of purchases are reimbursable.

3. Even if the purchase is allowable, the reimbursement may be denied.

Using personal funds to make business purchases should be discouraged whenever possible.

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Who determines reimbursement allowability?

• Fiscal Officers (FOs) determine if a reimbursement is allowable.

• FOs are determining two things:

– Are the goods purchased reimbursable?

– Is the sales tax paid reimbursable?Reimbursing sales

tax is the FO’s decision.

There is no university standard.

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What guidelines are used?• FIN-ACC-620: Reimbursement Under the Accountable Plan

– Business connection. The reason for the purchase. Purchase must be:

• Necessary

• Appropriate to the activity

• Reasonable in amount

• Serving a bona fide university purpose

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FIN-ACC-620 continued• Substantiation; documentation of the purchase.

– Original receipts (or their equivalent) are always required and must state:

• The date of purchase

• Where the purchase was made

• Proof of purchase

• An itemized list of goods purchased and their associated costs

Receipt requirementsProof of funds tendered:

• Typically, the last four digits of a credit card.

• Ultimately, must show proof that money changed hands.

Date of transaction

Proof of purchase

Vendor name

Amount of transaction

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What can’t be reimbursed?• Services paid for with personal funds.

– Requires the collection of tax information from the vendor who provided the service.

• Items restricted from purchase on the P-Card.

– SOP-PCARD-04: Restricted Items provides a full list and includes things like:

• Gift cards, cell phones, furniture or furnishings, purchases from online auction sites (like eBay or Etsy), and more.

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Reimbursement processingWhich system you use to process a reimbursement is dependent on who you’re reimbursing.

Employee or Student*? Supplier?

*Students may need to be reimbursed using the Student Information System (SIS). See the Student Payment Guidelines for details.

Employee reimbursement entry and tracking

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Delegates in Chrome River• Expense owners (the people who spent their money) can

submit their own reimbursement reports, or they may be submitted by a delegate.

• If your department processes reimbursements centrally, review the Delegates and Super Delegates in Chrome River guide to learn how to gain delegate access.

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Click +Create on the Expenses ribbon.

If you’re a delegate, click your name to

search for or select another expense

owner.

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Report name format: [Expense Owner] [Vendor] [Purchase date]

Did you only make this purchase because of a situation caused by COVID-19?

The reason this purchase was made.

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Select the tile that represents the

category of what was purchased.

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Select the object code that represents what

was purchased.

Not sure what to pick? Consult your FO.

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The date the purchase was made.

Expense amount.

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The account used to reimburse the purchase.

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Receipts are required for all out of pocketreimbursements.

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Three ways to attach:• Drag and drop• Click Add Attachments

and browse computer.• Click Add Attachments

and browse receipt gallery.

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What the expense owner

will receive.

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What about sales tax?• If sales tax is being reimbursed it must be itemized

separately from the expense.

• Sales tax for non-emergency purchases is considered a fringe benefit and is reported as taxable income on the employee’s W-2.

• Sales tax for emergency purchases is not taxable and coded differently.

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If the purchase was truly an emergency, sales tax paid should be itemized using Tax > Sales Tax – 5173.

This is rare!

Non-emergency, common.

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Pay Me amount updates to

include sales tax.

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Wait a minute…

Per the Accountable Plan, reimbursements requested 121-365 days after purchase are still reimbursable but

taxable to the expense owner.

In these situations, the entire amount being reimbursed (expense + tax paid) should be coded as a Taxable

Expense – Object Code 4580.

Correct!

Isn’t there a guideline about 120 days?

Reimbursements aged 366+ days are not allowable.

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The entire expense + tax being reimbursed entered as one line.

No itemization necessary because the entire

reimbursement is taxable.

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Reimbursement issued by Chrome River.

Included as taxable wages on employee’s pay advice.

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Click Submitted in the Expenses ribbon to view

reports and tracking information.

Let’s talk report tracking.

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Select a report then click Tracking at the

top of the report.

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Select the expense then view Routing

Steps.

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Chrome River payments• Starting soon, payment details will be available on the

Chrome River expense report.

• Will include details such as payment date, payment method, and check number.

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Report status will reflect Paid or Partially Paid if payment has

been generated.

Note: this only applies to payments made via direct deposit or paper check.

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Select report to view payment

details. Payment via check:starts with “1”

Payment via direct deposit: starts with “5”

Supplier reimbursement entry and tracking

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A couple notes before we dive in:• Remember: our discussion today excludes travel

reimbursements.

– Travel reimbursements for nonemployees are processed in Chrome River.

• For a full walk through of the check request process, review the Check Request Essentials webinar.

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Step 1: search for the supplier• Always search for the supplier in BUY.IU before submitting a supplier

request form.

• The individual may have worked with another IU department or another Jaggaer institution.

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No results?

Uncheck the box next to In Network to search the

entire Jaggaer database.

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Still no results?

This person has truly never worked with IU or another

Jaggaer institution.

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Requesting a supplier• Reimbursement is entered within

120 days of the purchase date

AND

• Supplier accepts payment via paper check.

• Reimbursement is entered 121-365 days after the date of purchase.

OR• Supplier requests payment via

ACH/direct deposit or wire transfer.

Use the One-Time Refund or Reimbursement supplier request form.

No registration required, reimbursement is not taxable, no electronic payment

detail needed.

Use the Check Request (Tax ID Required) supplier request form.

Registration required due to taxability of reimbursement or electronic payment.

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If you do find the supplier, you want to see this:

Green check = active

Approved = reviewed and approved by SDM.

Registration Type may vary.

Profile 3 – No Tax ID is okay for reimbursements within 120 days of

purchase.

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Click the Forms shortcut on the shopping dashboard to access a

list of check request forms.

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Click the form name or Submit Request to start.

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The addresses displayed here do not represent

where the payment will go!

Review fulfillment centers on the supplier profile to

locate remittance information.

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Business Purpose explains why this is a legitimate use of IU

funds.

Unit Price = reimbursement amount. No tax breakout necessary.

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Commodity codes• Commodity codes describe the type of goods or services being

purchased or paid for.

– Drive document routing and approvals.

– Most check request forms have a default commodity code.

• On this form, we’ll need to search for and select a commodity code that reflects what the supplier is being reimbursed for.

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Enter search terms.

Keep it simple! One or two keywords.

Select the appropriate code.

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Remember, the receipt must state:

• The date of purchase• Where the purchase was made• Proof of purchase• An itemized list of goods purchased

and their associated costs

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If this a taxable reimbursement, a reportable object code must be

used.

Reportable object codes trigger tax reporting and tell University Tax

Services that the situation occurred.

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Locate your past orders using the Orders module > My Orders > My Requisitions

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Can use the filters to the left or quick search at the top to locate order by cart name,

supplier, etc.

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Jump to the invoice using the Related Documents link.

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Pay Status reflects if the payment has been made. Paid = payment

generated.

Due Date reflects when payment will be made. Not true for check

requests!Review the Payment Information

section for payment date.

Where payment

will be sent.

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Record No. = Check or ACH number

Record Date = date payment was issued

Total = amount paid

Wrap up & resources

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Resource recap• FIN-ACC-620: Reimbursement

Under the Accountable Plan

• TSOP 9.02: Accountable Plan Reimbursements

• SOP-PURCH-11: Out of Pocket Reimbursements for Employees and Students

• SOP-PCARD-04: Restricted Items

• Employee Out of Pocket Reimbursements video

• Out of Pocket Reimbursement guidelines for employees

• Student Payment Guidelines

• Delegates and Super Delegates in Chrome River

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More resources!• Organize Receipts in a SNAP news

article

• One-Time Refund and Reimbursement Supplier guide

• Check Request (Tax ID Required) supplier guide

• SOP-PURCH-17: Check Requests

• BUY.IU Object Code Dictionary

• New Supplier Flyer

• Purchasing, P-Card, AP, and SDM support form

• Controller’s Office contact form

• Travel help desk: travel@iu.edu

• Training team email: estc@iu.edu

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Office Hours• Attend via Zoom, come and go as you please.

• Bring questions related to the BUY.IU interface update, processes covered in these webinars, whatever!

• A member of the VPCFO Training & Communications Team will address your question.

• Sign up on our events calendar.

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Let us know how we did• Complete a two-minute Qualtrics survey.

• Feedback is anonymous (and very appreciated)!

• Link to the evaluation is in the chat or available here: https://go.iu.edu/44Gt

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Question & Answer