60 Day Rule-Legal Requirement in the US

[AmberLee]

We have a 60 day rule in our policy for all expenses, including out of pocket. It simply states expenses over 60 days won't be approved. I can make exceptions up to 180 days.

I've got a person who is trying to submit expenses from 2 years ago! Are we legally required to reimburse him?

[Abhinandan]

Yes, legally the expense is supposed to be reimbursed with exception approval.  The reason being the user had incurred expense on behalf of the business and liable to receive reimbursement.

[KevinD]

@AmberLee two years? I give props for the procrastination dedication. LOL. 

My guess is you are probably required to reimburse. However, depending on the state, there might be certain laws that will say what you can and cannot do. I wonder if there is a difference if the expenses are out of pocket vs. company card. 

[AmberLee]

These are out of pocket, not credit card. For credit cards I know the law states that anything older than 60 days is taxed because the IRS considers it income. Out of pocket is a whole new ballgame. 

We made him email the CEO asking for an exception with an explanation of the expenses and why they were so late... he asked if 'laziness' was a good enough excuse. 🙄

[dlaque]

I'd definitely reach out to your legal dept. and potentially HR to get more information. Also, what does your business policy state?

[tonitke]

google the 60 day accounting accountability rule.  it states:

The "60-day rule" in accounting, particularly within the context of accountable plans, means that business expenses must be substantiated to the payer (e.g., employer) within 60 days of the expense being paid or incurred. 

it goes into this being an IRS rule for the US only but IRS states that if the user has a valid reason, ie. FMLA absense, then you can elect to pay the user for cash reimbursement.  IF you have a policy that states you do not reimburse after 60 days without extenuating circumstances then you have whats called an accountability policy and fall under this rule.  If your company chooses to do the reimbursement then you are subject to an audit by the IRS and if they don't deem the situation as a valid circumstance, then it can be considered as income to the user and must be reported as such.  It is not clear on the legal stance of if it should be paid.  I would ask your legal team to get involved. 

[AmberLee]

I'm going to ask legal about this as well but I thought the 60 day rule you mentioned was for credit cards, not out of pocket? We most definitely have the 60 day rule in our policy as well. Very interesting...

I would love to be able to enforce this because I'm literally turning the 60 day audit rule off every single day for exceptions. What's the point of having a policy if it's not enforced?