IRS rules relating to employee business expense reimbursements require employment/income tax withholding and W-2 reporting on any excess amounts paid. The 'Excess Amount' is the portion greater than the applicable Federal rate and not substantiated by receipts. Any travel vouchers with excess amounts must be processed through the CAS by indicating the excess amount in the IRS amount field and a 'T' in the IRS code as explained in Section 8.0140.

PCM EXCESS AMOUNTS

     Excess amounts for Personal Car Mileage (PCM) occur when an employee is reimbursed at a rate that exceeds the applicable rate allowed by the IRS. This rate is published annually by the federal government. The 2006 maximum rate allowed by IRS for PCM is 44.5 cents per mile. OSC Procurement and Disbursement Guidelines (G) Bulletins are issued periodically to disseminate the applicable rate. If, for example, an employee is reimbursed at the rate of 46.5 cents for 100 miles ($46.50), the excess amount for 2006 is $2.00 (100 miles at 2 cents per mile). Since the State reimburses PCM at a fixed rate per mile, rather than based on receipts, all amounts reimbursed in excess of the maximum rate allowed by IRS are 'excess amounts'.

PER DIEM EXCESS AMOUNTS

     Excess amounts for per diems occur when reimbursement of an employee in overnight travel status exceeds the maximum Federal per diem for the traveler's destination and is not substantiated by receipts. Maximum per diem rates are published annually by the federal government. OSC Procurement and Disbursement Guidelines (G) Bulletins are issued periodically to disseminate the applicable Federal per diem for each state/city/county. Maximum per diems consist of maximum lodging rates plus maximum meal and incidental expense (M&IE) rates. In some instances, elected officials, members of the judiciary and high level executive branch officials are eligible for New York State per diems which exceed IRS' maximum per diems. Any portions of these excess amounts which are not substantiated by receipts must be reported to IRS. For example, if a commissioner in overnight travel status received in 2006 a $129 per diem in accordance with current travel reimbursement rates for traveling to Newark, New Jersey where the maximum IRS per diem is $109, the excess amount of $20.00 is reportable unless lodging and M&IE receipts totaling at least $129 were presented to substantiate expenses.

MEAL AND INCIDENTAL EXPENSE EXCESS AMOUNTS

     Some State officials who must present lodging receipts for overnight travel can receive a meal allowance in excess of the IRS maximum M&IE rate. For example, members of the judiciary are eligible for per diems when traveling. Their lodging must be substantiated by receipts and is therefore not reportable to IRS. The meal component does not require receipts. For a trip to Albany, where the meal allowance is $54 and the 2006 IRS M&IE rate is $49, the $5.00 difference is an excess amount which must be reported. (Review current current travel reimbursement rates to determine the applicable Federal per diem for each state/city/county).

FINANCE OFFICE RESPONSIBILITIES

     1) Identify employees receiving excess amounts;

     2) For employees receiving excess amounts, prepare Travel Vouchers     according to Section 8.0140;

     3) Maintain supporting documentation of all excess payments made. Documentation may be necessary to answer employee questions and for OSC audit;

     4) Make corrections to data on the PCM file by the end of the calendar year so that amounts on PCM010 and PCM020 reports to employees can be reconciled with the excess amount reported on the employee's W-2; and

     5) If additions or adjustments must be made after the last payroll period in December, have your payroll office contact the Payroll Deduction Section at 518-473-1989. If adjustments are not identified prior to OSC's production of W-2's, your agency will have to prepare amended W-2's.