We know that many of you use your T&E cards to purchase expenses on behalf of other employees in your department. Although this is within policy, we want you to be aware of tax implications that impact you as the cardholder.
If your card is used for a business meal with guests that do not have a business purpose, you, as the cardholder, are responsible for the tax implications related to those expenses. The IRS considers non-business purpose expenses to be taxable income that someone in the organization is responsible for. For accounting and reporting purposes, that responsible party is the T&E cardholder. Therefore, any T&E cardholder’s spending on business meals for guests without a business purpose will be reported to payroll as taxable income.
This is an update to how the accounting process currently operates, allowing UVA to align more closely with IRS policy. Although we are not putting any system control in place to prevent you from paying for guests’ meals without a business purpose, we strongly encourage you to avoid the tax liability you would be assuming. Instead, have guests pay for their meals or coordinate carefully on which T&E cardholder pays for the guest and, therefore, has the tax amount taken out of their payroll check.
Please let us know if you have questions – we want to ensure that you are fully aware of the issue.
Travel & Expense
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