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Megan C
Megan C, Certified Public Accountant (CPA)
Category: Finance
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Experience:  Licensed CPA, CFE, CMA, CGMA who teaches accounting courses at Master's Level
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We are a non-profit and use an accountable reimbursement plan.

Resolved Question:

We are a non-profit and use an accountable reimbursement plan. Can I reimburse someone for an airfare purchase before the ticket has been used? If so, what are the implications...
Our normal policy has been to reimburse only after the ticket has been used for the business purpose.
Thanks for any help you can provide.
Kirk
Submitted: 1 year ago.
Category: Finance
Expert:  Megan C replied 1 year ago.

MyVirtualCPA :

Thank you for your question, and thanks for using JustAnswer.com

MyVirtualCPA :

The answer to your question is yes, you can reimburse airfare before the ticket is used, because you are still requiring them to submit the actual expense

MyVirtualCPA :

So, this is completely acceptable in an accountable plan

MyVirtualCPA :

Whether or not you would require the person to pay you back for a ticket that is unused would be up to your organization and would not have a tax impact.

Customer:

In our case, it is volunteers (members of Task Forces, Committees, etc.), not paid employees, that we reimburse for travel expenses. If we were to pay them for the airfare expense before they used the ticket and then they end up not using the ticket and not getting a refund, would our payment to them (in their personal name) need to be considered as taxable income (1099 I suppose)?

MyVirtualCPA :

They would need to pay you back or else that would be taxable income because it was not paid for your tax exempt purposes

Customer:

So to confirm... what you're saying is that if the ticket goes unused due to unforeseen circumstances, our non-profit would not be able to simply absorb the expense of an unused ticket with no effect on the volunteer who bought the unused ticket. Rather, unless the volunteer paid us back the funds they received to cover the cost of the unused ticket, we would be required to report the airfare expense payment we made to them to the IRS as 1099 taxable income.

MyVirtualCPA :

That would be correct.

MyVirtualCPA :

Is there anything else I can assist you with today?

Customer:

Thanks, XXXXX XXXXX thing: are you able to refer me to the IRS publication that addresses this issue?

MyVirtualCPA :

I am sorry, I do not have link to the citation

MyVirtualCPA :

There is no publication that handles this exact scenario

Customer:

thanks for your help.

MyVirtualCPA : You're welcome. Is there anything else I can assist you with?
MyVirtualCPA : If you would please rate my response as "excellent" so that I may receive credit for assisting you today
Megan C, Certified Public Accountant (CPA)
Category: Finance
Satisfied Customers: 15588
Experience: Licensed CPA, CFE, CMA, CGMA who teaches accounting courses at Master's Level
Megan C and other Finance Specialists are ready to help you
Expert:  Megan C replied 1 year ago.
Thanks, Kirk for your positive rating. Please come back and visit MyVirtualCPA for any of your tax, finance, or social security needs. It was a pleasure working with you today.

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