Friends of Chinese Reformed Theological Seminaries
(Friends of CRTS)
A Pennsylvania non-profit supporting Chinese Reformed Theological Seminaries
Corporate Office: 2419 Trotter Drive, Allison Park PA 15101
Friends of CRTS Accountable Reimbursement Policy
= Approved by a special vote of the Board of Directors, November 18, 2004
= Reaffirmed by the Board, June 2005
The following resolution was duly adopted by the Board of Directors of Friends of Chinese Reformed Theological Seminaries was passed by an official majority vote of the Board on November 18, 2004 and reaffirmed at a regularly scheduled meeting held in June 2005, a quorum being present.
Whereas, income tax regulations 1.162-17 and 1.274-5T(f) provide that employees / self-employed persons (henceforth "employees") need not report on their tax return expenses paid or incurred by them solely for the benefit of their employer / client / customer (henceforth "employer") for which they are required to account and do account to their employer and which are charged directly or indirectly to the employer; and
Whereas, income tax regulation 1274-5T(f) further provides that an adequate accounting means the submission to the employer of an account book, diary, statement of expense or similar record maintained by the employee in which the information as to each element of expenditure (vender, amount, date, place, business purpose, and business relationship) is recorded at or near the time of the expenditure, together with supporting documentary evidence, in a manner which conforms to all the "adequate records requirements" set forth in the regulation; and
Whereas, Friends of Chinese Reformed Theological Seminaries (henceforth "the corporation") desires to establish a reimbursement policy pursuant to the regulations mentioned above; be it therefore
Resolved, that the corporation hereby adopts an accountable reimbursement policy pursuant to income tax regulations 1.162-17 and 1.274-5T(f) upon the following terms and conditions:
1. Adequate accounting for reimbursed expenses. Any "employee" (as defined below) of the corporation shall be reimbursed for any ordinary and necessary business and professional expense incurred on behalf of the corporation, if the following conditions are satisfied: (1) the expenses are reasonable in amount, and are "permitted business expenses" (as defined below); (2) the project or business trip which the expense is a part of is approved by the "financial officer of the corporation" (as defined below), (3) the employee substantiates such expenses by providing the corporation financial officer with (a) an accounting of such expenses including the vender, amount, date, place, business purpose, and in the case of entertainment expenses, business relationship of each expense, and (b) receipts for all lodging expenses and all other expenses of $75 US or more, and (4) the expense is substantiated by the 15th day of the quarter following the date of the expense.
In the case of mailings, the post-mark date on the envelope will be considered the substantiation date. Receipts should be from the vender (not just a check or credit card statement) and include the vender's name, the date, the total (including tips), and, if not obvious, a description of the services provided. If such a receipt is not available, it may be replaced with the same kind of documentary evidence as would be required to support a deduction of the expense on the employee's federal tax return.
Under no circumstance will the corporation reimburse an employee for business or professional expense incurred on behalf of the corporation that are not properly substantiated according to this policy. In no event will an expense be reimbursed if it is not substantiated by the 15th day of the quarter after which the expense was incurred. Corporation employees understand that this requirement is necessary to prevent this corporation reimbursement plan from being classified as a non-accountable plan.
2. Permitted business expenses.
Permitted business expenses must be expenses that are incurred in furthering the purpose of the Corporation, which is, to provide Christian Mission support to Chinese Reformed Theological Seminaries in the United States and Abroad (henceforth, "the purpose of the corporation"). Permitted business expenses are limited to the following categories and restrictions:
(a) Travel, lodging, meals, and visa
A "corporation business trip" as used below is defined as a business trip whose main purpose is one of the following (or a combination of them):
(i) to attend the annual meeting of the corporation,
(ii) to visit a Church or Churches that supports the corporation or have expressed an interest in supporting the corporation, and in light of this has invited the employee to make a presentation,
(iii) to travel to a professional meeting related to the employee's work as a Seminary teacher at which the employee has been invited to make a professional presentation (read a paper, etc.)
(iv) to teach a course to Chinese students who are in training to be full-time Christian workers.
The corporation will reimburse employees for the cost of travel, lodging and meals during a corporation business trip. Travel shall include the cost of air travel, car rental (including insurance and gasoline) or use of a personal car (at $0.25 / mile). Lodging shall be the actual cost of lodging. Meals will be reimbursed on a per Diem rate of $34 US per day (partial travel days, i.e. the day of departure and return, will be reimbursed at $11 US per meal). The corporation will reimburse employees for the cost of a Visa purchased for the sake of the business trip.
If the employee's spouse travels with the employee on a business trip and also does so for one of the business purposes listed above, the spouse's travel expenses may also be reimbursed.
For trips that are partly for business and partly for pleasure, employee's must follow standard business practices. The cost of travel may be reimbursed if the main purpose of the trip was business; the cost of lodging and meals may be reimbursed for the business part of the trip.
The employee must include in his quarterly activity report details of activities during the corporation business trips for which he is reimbursed, including his spouse's involvement if his spouse's expenses are reimbursed.
(b) Books and professional fees
The corporation will reimburse an employee for the cost of reference books (dictionaries, commentaries, encyclopedia's), subscriptions to professional journals, and membership fees in a professional society; provided that these books, journals or societies are related to the purpose of the corporation.
(c) Photo-copying, Printing, Mailing costs
The corporation will reimburse an employee for photo-copy, printing and mailing costs for material whose primary purpose is to further the purpose of the corporation. This shall include material (i) whose primary purpose is to promote or raise funds for the corporation or a Chinese Reformed Theological Seminary, (ii) that is distributed to students in a class at a Chinese Reformed Theological Seminary or (iii) that is required by the corporation for administrative purposes (i.e. copies of materials for Board members such as the Board agenda or corporation financial statements, annual tax letters sent to contributors, etc.)
(d) Hired assistants
The corporation will reimburse employees for the costs of hiring assistants the purpose of which is to further the purpose of the corporation. The assistants must be paid a reasonable rate, and most be involved exclusively in business related activities (such as translation of religious material, secretarial work, etc.). An employee who hires an assistant must include a report on the activities of the assistant in his quarterly activity report.
(e) Moving expenses
The corporation will reimburse an employee who moves his primary place of work for the cost of moving furniture and personal items and for the cost of travel for his entire family. This includes missionaries who are either beginning or ending their missionary work in a foreign country. In accordance with IRA regulations, the new place of work must be at least 50 miles farther from the employee's former residence than the former place of work is from this former residence. These moving expenses shall be subject to a $5,000 US maximum for the cost of moving furniture and personal items.
(f) Office equipment and costs (including personal computer, telephone calls)
The corporation will reimburse employees for office equipment and costs, including the cost of a personal computer and telephone, under the following conditions:
(i) The office equipment or cost is used primarily to further the purpose of the corporation
(ii) The equipment is used exclusively in, or the cost is incurred at, the employees' office or work place (although portable equipment may be used while on the road and occasionally at home).
(iii) The equipment is used, or the cost incurred, exclusively for business purposes.
Because the tax rules for calculating and substantiating the business expenses of office equipment and costs (including personal computers and telephones) that are used or incurred in the home are complex, the corporation does not normally reimburse employees for such expenses. The only exception is if the expense meets the above conditions and is incurred in a "home office". In accordance with IRS guidelines, the corporation requires that a "home office" meets the following conditions: (1) the "home office" is used exclusively for business purposes (i.e. it must not be used by any other family member for any other purpose), (2) the employee does not have an office that is not in the home, and (3) the "home office" is the employee's principle place of doing business. Employees claiming a home office must substantiate these conditions.
3. Excess reimbursements. Any corporation reimbursement that exceeds the amount of business or professional expenses properly accounted for by an employee pursuant to this policy must be returned to Friends of CRST within 120 days after the associated expenses are paid or incurred by the employee, and shall not be retained by the employee.
4. Cost consciousness. The corporation requires employees to be cost conscious in reporting business expenses. The corporation will not reimburse employees for extra costs beyond what is necessary to accomplish the business purpose of the expense (i.e. for extra cost incurred by staying at a more expensive hotel than need be, flying first class, selecting a more expense economy class ticket to get frequent flyer miles, renting a larger car than is needed, extending the time of a business trip for personal reasons, or increasing the costs for any similar personal reason).
5. Reimbursements not funded out of salary reductions. Reimbursements shall be paid out of corporation funds, and not by reducing pay checks or other support for the employee by the amount of business expense reimbursements.
6. Corporation missionary accounts. The corporation designates funds for each of the missionaries it supports. Reimbursed business expenses incurred by a missionary shall be paid out of his designated funds. The only exception is that the expenses incurred by the executive director for the purpose of carrying out his work as the executive director shall be paid out of corporation undesignated funds.
7. Tax reporting. The corporation will not include in an employee's W-2 form or 1099 misc. form the amount of any business expense properly substantiated and reimbursed according to this policy, and the employee does not report the amount of any such reimbursement as income on Form 1040 or Schedule C.
8. Retention of records. All receipts and other documentary evidence used by an employee to substantiate business and professional expense reimbursed under this policy will be retained by the corporation.
9. Employees. For the purpose of this policy, the term "employee" shall include the following persons: the executive director of Friends of CRST and all the missionaries which Friends of CRST supports.
10. Financial advances. Normally, an expense shall be reimbursed only after it occurs, has been substantiated, and has been approved by the corporation financial officer. However, if the employee requests, the financial officer may give the employee an advance in the amount of the expected expense. Such an advance must be in the same quarter of the year as the expected time when the expense will occur.
11. Financial officer of the Corporation and Reimbursement. For the purpose of this policy, the Board of directors of the corporation shall appoint a financial officer (who may or may not be the treasurer of the corporation). The financial officer shall be responsible for determining if reported expenses are reimbursable under this policy. A employee may appeal a decision of the financial officer to the Board of Directors.