Procedure 20335c: Meals & Incidental Expenses
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Introduction
Meal expenses (subject to limitations) are reimbursable for overnight travel. Meal and tip expenses not involving an overnight stay are not reimbursable unless documentation supporting the reimbursement clearly establishes that the meal is taken during overtime work periods or for official business reasons.
Meals may be reimbursed when an employee is traveling on non-daily, non-routine official business outside of his/her official station. These expenditures must be kept reasonable and follow the meals and incidental expense (M&IE) per diem rules. They are also subject to question by the Controller. Any unusual charges must be fully explained on an attachment to the travel voucher. Employees engaged in constant daily routine business travel are not reimbursed for meals.
Meal Reimbursement for Overnight Travel
Meal and certain other incidental travel expenses are reimbursable only for overnight official business travel outside the traveler's official station. The reimbursement of such expenses (including all related taxes and tips) shall be made to the traveler based on a fixed allowance. The fixed allowance is referred to as the meals and incidental expense (M&IE) per diem. The meal per diem is a reasonable allowance for meals and incidental expenses for the area. It is not intended to be a reimbursement for actual expenses but rather a reasonable allowance. Some travelers may spend more than the amount for personal travel expenses while others may spend less than the M&IE per diem but the principle behind the per diem is that it is a reasonable amount to cover the traveler’s necessary expenses. Direct university billing of meal expenses incurred during overnight travel, including charging meals to direct-billed hotel rooms, is not permitted. The M&IE per diem must be paid directly to the traveler, even where it can be shown that one traveler incurred the expenses on behalf of another. The M&IE per diem used shall correspond to the location of the related overnight lodging for out-of-state, in-state, and foreign travel. The applicable M&IE per diem, or fraction thereof for a departure or return day, is payable to the traveler without itemization of expense or receipts. For calculations of the M&IE on a departure or return day, see Procedure 20335v (Lodging and (Travel Expense Reimbursement Voucher)), One traveler cannot claim the meal for another traveler when the two of them meet together whether it is to discuss business or to dine together while on travel status. They must both use the M&IE allowance on their respective travel vouchers.
· No Cost Meals. When meals are provided at no cost in conjunction with travel events, the applicable M&IE per diem shall be reduced by the dollar amount shown for the applicable meal in the M&IE Rate Table. When meals are included with registration or lodging expense as part of a package plan, record the number and type of meals (breakfast, lunch, dinner) on the travel voucher. If a continental breakfast or reception is offered as part of the travel event and the food/timing is sufficient to serve as a meal, the traveler must reduce the per diem by the appropriate allowance amount.
· Incidental Travel Expenses Covered by the M&IE Per Diem. All service fees or tips (including but not limited to bellhops, skycaps, maids, waiters/waitresses, taxi and limousine drivers), laundry expense, personal telephone calls, and transportation between places of lodging or business and places where meals are taken are reimbursed through the incidental expense portion of the M&IE per diem.
Meal Reimbursement for Overtime and Official Business Meals
Meal expenses not involving an overnight stay are generally not reimbursable. Reimbursement may be allowed if documentation supporting the reimbursement clearly establishes that the meal is taken during overtime work periods or for official business reasons. To be eligible for reimbursement, such meals must be considered essential to the university's mission and a business necessity.
· Official Business Meals. Official business meals must involve substantive and bona fide business discussions and must be recommended for payment by the department head and approved by the Office of the Controller. A group conducting a meeting in a business atmosphere may charge meals to public funds if such activity maintains the continuity of the meeting and to do otherwise will impose arduous conditions on the meeting participants. Business meals may not be charged to public funds when no need exists for continuity of a meeting. Such activity is considered to be an entertainment cost and not an appropriate charge to public funds. Allowable business meal functions cannot consist entirely of university employees from one department or college and they normally include non-Virginia Tech employees.
Authorized official business meals may be reimbursed based on actual costs incurred up to the amount shown for the applicable meal in the M&IE Rate Table. The M&IE rate used shall correspond to the location in which the official business meal was taken for in-state, out-of-state, and foreign travel.
Meal per diem rates on the individual meal rate table are to be applied to all business meal functions including entertaining University visitors or recruiting new employees. Charges for entertaining and recruiting in the Blacksburg area or other official station are to be reimbursed on a Travel Voucher form. Itemized receipts are required for reimbursement of business meal expenses. The business purpose for the meal and the names and association of all attendees must be included with the documentation to help show the business necessity of the event. Initials of the representatives are not sufficient to document the attendees at the meeting.
Individuals who are not in a travel status are eligible for meal reimbursement if they participate in a business meal. Individuals in travel status may attend meals that qualify as business meals. For individuals in travel status, the per diem allowance applicable to the business meal must be clearly excluded from the daily M&IE reimbursement.
Expenses of university employee's spouses involved with an interview process or other business meeting are not reimbursable from public funds.
· Overtime meals. If the department officials require employees to work overtime, the department may provide an allowance for meals for those employees. Overtime work periods may also include extended work hours due to non-overnight travel. To be eligible for overtime meals required in conjunction with non-overnight travel, the traveler must, out of business necessity, leave home before 6:30 a.m. (for breakfast) and be unable to return home before 7:30 p.m. (for dinner). The overtime meal must be taken in route home when it is not possible for the traveler to arrive home by 7:30 p.m. Meals taken at the home base after the traveler arrives cannot be reimbursed. Generally, an employee would not be eligible for an overtime meal until they had out of necessity been on duty for 10 ½ hours during the day. Lunch meal expenses are not reimbursable under the provisions of the overtime meal reimbursement policy.
An overtime meal may be charged to public funds only when the department head provides a “separate letter” explaining why the employee was required to work past their normal work day. The documentation must describe the circumstances involving the overtime and note that the overtime was essential to the department. The letter must include the employee’s normal work schedule for the day and the overtime start and end times. The meal is not reimbursable if taken at the end of the overtime period.
Authorized overtime meals may be reimbursed based on actual costs incurred for each meal up to the amount shown for the applicable meal in the M&IE Rate Table. The M&IE rate used must correspond to the location in which the overtime work took place. Receipts are required. If a receipt is not available, reimbursement will be made at the rate of $5 for meals within an employee’s official station and $7.50 outside the official station. An “official station” is defined as the area within a 25-mile radius of where an employee routinely performs his/her duties.
An overtime meal allowance based on the number of hours worked is considered taxable wages by the IRS.
IRS Reporting Requirements
Meal reimbursements made in accordance with university regulations are not considered by the IRS to be reportable income, except for meal/tip expenditures of $75 or more which are not related to overnight travel. This includes situations where one traveler purchases and claims reimbursements for the meals of another person on official business. The IRS income-reporting requirements for meals reimbursed under a sponsored program exception must be determined by the offices of Sponsored Programs and the University Controller.
An itemized receipt for each business meal must be provided. If a receipt is lost and the reimbursement is approved, reimbursements of $75 or more will be reported as gross income on the employee's W-2 form at year end.
How to Use M&IE Rates
Individual meal guideline amounts for each respective daily meal are presented in the guideline tables shown in Procedure 20335r (Lodging and (M&IE)). These individual meal amounts are also used to determine the maximum meal reimbursement amounts for:
· Overtime meals
· Official business meals
· The M&IE reduction which must occur where meals are provided at no cost during an overnight travel period
Unless specifically listed in Procedure 20335r (Lodging and (M&IE)), the daily meal and incidental expense limits including taxes and surcharges are as follows:
· In-State - $39.00
· Out-of-State - $44.00
Out-of-Country Meal Guidelines - Generally, the reimbursement limits for foreign travel are the same as the "out-of-state" guidelines. Certain foreign destinations may justify higher amounts. Departments may obtain out-of-country lodging and M&IE limits from the U.S Department of State web site http://www.state.gov/travelandbusiness/. A copy of the page that reflects the rate for the area traveled for the applicable time of travel (rates may change monthly) must be attached to all travel payment documents.
Departure and Return Days - The guideline tables show the reimbursable amount for departure and return travel days, which is 75 percent of the meals. The Incidentals Expense (IE) rate of $3 per day is NOT prorated on departure and return days. For example, if the M&IE rate allows a $39 total reimbursement, $30.00 [($36 x .75) + 3] would be allowable on a travel departure or return day.
When meals are provided at no cost in conjunction with travel events on a travel departure or return day, the full Meals per diem reimbursement rate is reduced by the full amount of the appropriate meal(s) followed by a 75% proration of the balance. For example, if the M&IE rate allows a $39 total reimbursement, and lunch was provided at no cost, the total allowable reimbursement for that day would be $21.75 [(($36 - $11 lunch) x .75)) + $3].
Which M&IE rate? - For all travel, out-of-state, in-state, or foreign travel, the M&IE rate is calculated based on the lodging location, except for the last day of travel. The M&IE for the last day of travel is based on where the traveler spent the previous night.
Exceptions to the M&IE Per Diem Guidelines
Exceptions to the M&IE Per Diem meal rates can be granted for:
· Travel in Support of Sponsored Programs. If the travel is reimbursed solely from sponsored program funds, travel reimbursements are governed by the stated terms and conditions of the individual grant or contract. Any sponsored program exception supersedes other university reimbursement requirements and documentation from the grant must be attached to the payment voucher.
· Official Business Meals Business meal reimbursements up to 50% over the applicable per diem guideline may be approved with sufficient justification and the original, itemized receipt. Business meal reimbursements above 50% over the applicable per diem guideline are not permitted.
Conference Banquet Meal Service
The travel meal limits do not apply to meals that are part of a conference or other group procurement. The Virginia Public Procurement Act applies to the purchase of meals when they are a part of a conference or group pre-planned business function. While it is essential that economically priced accommodations be used for conference facilities, it is not mandated that the limits for individual business travel also be applied as limits for conference meal services. These services are obtained through competitive bids or proposals. In each such procurement, departments should be sensitive to the fact that all of these procurements are open for the public review and efforts to keep the cost to a minimum should be made; however, when it is not possible to provide services within the meal guidelines, the most suitable offering available is acceptable.
For instance, meal services at the Inn at Virginia Tech and other hotels are charged from two different menus depending on the type of services required. Banquet services include: 1) a private room, 2) a separate attendant, 3) table linens, 4) menu items prepared in advance and served as the attendees are seated, and 5) set up/clean up of a separate room. For these additional services, the university can sometimes pay above the meal limits.
Each department should request the service as needed and must document the need for such service on the request that is sent to the Inn at Virginia Tech Business Office or on the commercial hotel restaurant payment voucher. To be sure that charges are allowable and approved, it is advisable to request prior approval when services requested do not fall within the allowable rates listed in the M&IE rate tables. Questions should be addressed to the Manager of Accounting Services. For reimbursements where these guidelines are used, “Cost based on Procurement Guidelines” must be clearly stated on the reimbursement voucher.