Meals and entertainment expenses are allowable expenditures of USNH funds if they are reasonable and necessary expenses of carrying out the mission of USNH. The guidelines in this procedure govern the allowability of these expenditures. While specific campuses, departments and funding sources may choose to be more restrictive than this policy allows due to budget constraints or other reasons, they may not be less restrictive.
B. Allowable and Non-Taxable Meals
Meals provided to USNH employees that fall into one of the following five classifications are allowable and nontaxable to the recipient USNH employee:
1. Meals provided while the employee is in overnight travel status in accordance with Procedure 7-007, Travel Meals.
2. Meals with a clearly substantiated business purpose, i. e., those directly associated with the active conduct of USNH business. Examples of business meals include departmental meetings and other business meetings with colleagues, as well as dinners with potential students, donors or prospective employees at which a bona fide business discussion takes place. The business discussion may not be secondary to the purpose of the meal. The employee must be present at the meal where the business discussion takes place. Meals eaten alone do not qualify as business meals.
The per diem method of reimbursement is not allowable for business meals.
Documentation must adhere to Procedure 2-210, Adequate Supporting Documentation and requirements include the date, time, location, names and titles of those in attendance, and business matters discussed. In cases where there are more than 6 people in attendance, the name of the committee or organization and the number of participants will suffice (e.g., Faculty Senate meeting, 12 in attendance). Original receipts must accompany the request for reimbursement of actual meal cost. Documentation requirements stated above (i.e., date, time, location, names and titles of attendees and business matters discussed) also apply to meals charged on an interdepartmental voucher (e.g. at the Student Union) and to catered meals.
3. De minimis "supper money" provided on an occasional and infrequent basis to enable employees to work an extended day, which is defined as a period lasting at least 12 consecutive hours. De minimis is defined as any benefit whose value is so small that accounting for it would be unreasonable or impracticable. The employee may be reimbursed for actual meal cost or be paid a meal allowance not to exceed $10, whichever is less. Documentation requirements include supervisor authorization, the date, time, location, hours worked and reason for the extended day. Receipts may be required if the expense is to be charged to a sponsored project; otherwise, receipts are not required. Employees should check with the grant administrator to confirm receipt requirements. These documentation requirements also apply to meals charged on an interdepartmental voucher or reimbursed through petty cash.
Supper money may not be routinely paid to an employee whose job consistently requires working an extended day. The employee's supervisor is solely responsible for making this determination, as signified by his/her authorization.
4. Infrequent, occasional meals provided to a group of employees, such as a campus picnic or holiday party. These meals are generally for the purpose of promoting goodwill, employee relations, morale, team spirit, etc. or for retirements, or major (e.g., 25 years) anniversaries of employment with the University. They must be reasonable and may not be lavish or extravagant. Documentation requirements include the date, time, location and nature of the gathering, name of the group and the approximate number of participants in attendance. Original receipts must accompany the request for reimbursement of actual meal cost. Documentation requirements stated above (i.e., date, time, location, nature of the gathering, group name and the approximate number of participants) also apply to meals charged on an interdepartmental voucher. The per diem method of reimbursement is not allowable. Generally, these expenses may not be charged to federal funds.
5. Meals provided for the convenience of USNH, on the premises of USNH, for a valid business reason. Examples include providing meals to food service employees or to an employee to ensure the employee is available for emergencies. In the latter case, to be exempt, the department must be able to show a history of emergencies in the employee's position as well as demonstrate that providing meals to the employee promotes readiness in dealing with the emergencies. The individual authorizing the award of meals to an employee is responsible for communicating the information to the USNH Disbursement Services Manager. This information must include the value of meals being provided, substantiation of why the benefit is being provided, and an explanation if this benefit should not be considered taxable wages.
c. Meals Considered Taxable Wages
Meals provided to USNH employees that do not fall into one of the five classifications specified in Section B of this procedure are considered taxable wages. The value of the meals will be included in the employee's wages with appropriate federal and FICA taxes deducted from the employee's normal wage payments. The taxable benefit and all taxes withheld will be reported on the employee's Form W-2 at year-end.
D. Entertainment Expense
Entertainment expense must be directly related to the conduct of USNH business. IRS regulations require that the USNH employee engage in the active conduct of business with the person being entertained.
1. Entertainment expenses associated with the active conduct of USNH business are allowed if they directly precede or follow a bona fide and substantial business discussion. This includes goodwill expenditures to obtain contributions from potential donors. The business discussion must be the principal aspect of the combined business and entertainment and must represent an active effort of the USNH employee to obtain a specific business benefit necessary to carrying out the mission of USNH.
2. The expense may not be lavish or extravagant.
3. Documentation requirements include the date, time, and location of the entertainment, names and titles of those in attendance, and the business matters discussed. Original receipts must accompany the request for reimbursement. Entertainment expenses are not allowed to be charged to any federally-sourced sponsored projects and may not be allowable on other sponsored projects; check with the grant administrator to confirm requirements.
An employee may be reimbursed for his/her actual cost of meals and gratuities or the reasonable cost of a moderately-priced meal of acceptable quality, whichever is less. Meals may not be lavish or extravagant. The per diem rate should be used to judge the reasonableness of meal costs incurred. Tips for meals in excess of 15% to 20% of meal cost are generally not appropriate as a USNH business expense and therefore will not be reimbursed.
Receipts for meals and entertainment expense should include a breakdown of meal cost, beverage cost, tax and tip, if available. Alcohol costs are generally not reimbursable (see Procedure 8-003, Alcohol). In the absence of a detailed receipt, original documentation (e.g., a credit card slip) indicating the total cost is acceptable if accompanied by a signed or initialed statement indicating that no alcohol is included in the expense submitted for reimbursement. Please note, KSC requires receipts for all business meals and entertainment costs.
G. Related Policies
For a discussion of related policies on alcohol, spousal attendance, and gifts, (see Procedure 8-003, Alcohol); (see Procedure 8-007, Spousal Expenses); and (see Procedure 8-008, Awards, Gifts, and Prizes), respectively. Requirements for appropriate supporting documentation can be found in Procedure 2-210, Adequate Supporting Documentation.
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