Expense-reporting programs with electronic credit card receipts.

• Author: Driscoll, David

G uses a business expense reimbursement program under which it reimburses employees for all reasonable and necessary travel and entertainment (T&E) expenses. It provides appropriate employees with a charge card from a credit card company. Employees may pay for business T&E by using the credit card or, alternatively, their own money.

G proposes to implement a program under which it will receive electronic receipts directly from the credit card company, for two types of expenses: (1) those that are clear on their face (e.g., an airline ticket or car rental charge); or (2) those for which an itemized breakdown is available electronically from the credit card company. It will not require its employees to submit paper receipts for these two types of expenses.

G will continue to require a paper receipt (containing the proper level of detail) for any expenses over $75 that do not meet the above criteria. For example, an electronic hotel receipt that fails to break out lodging, meals, entertainment, green fees and spa charges would inadequately describe the expense; thus, a paper receipt with such detail would be required. In addition, G will continue to require paper receipts for all expenses employees pay with their own funds.

G also proposes to pay the credit card company directly for all business expenses that the employees charge to the card. After receiving the expense data electronically from the credit card company, G will transfer it into a system employees can access to create expense reports. For each charge, the data would include the: (1) date; (2) amount; (3) merchant's name; and (4) merchant's location. To create an expense report, the employee would be required to add:

1. The company cost center from which the expense is paid.

2. The general ledger account number properly classifying the expense as T&E.

3. A description of the expense.

4. An itemization of any expense in addition to lodging incurred at a hotel. Employees would also be required to designate any personal expenses as such.

Once the expense report is completed and approved, G would pay the credit card company for all business expenses listed on the report. Employees would be required to pay the credit card company for any personal charges.

G's use and retention of electronic records under the program would continue to meet Rev. Proc. 98-25's requirements.

Analysis

Under Regs. Sec. 1.274-5(c)(2)(iii), documentary evidence is required for any expenditure for lodging while...