Spousal/Companion Travel & Entertainment Expense Policy
Effective Date: April 2018
Responsible Officer: Executive Vice President, Treasurer and Chief Operating Officer
This policy affirms and provides guidelines, in compliance with the Internal Revenue Service (IRS) Code and Regulations, with regard to spousal/companion travel and entertainment in conjunction with an employee or any other authorized person as defined herein who is conducting business on behalf of the University.
This policy applies to all faculty and professional staff members and any other authorized person as defined herein of Drexel University (including its subsidiaries and affiliated entities, such as the Academy of Natural Sciences of Drexel University and Drexel University Online) who incur expenses for traveling and entertaining as part of conducting official business on behalf of the University. This policy does not apply to professional staff members who are affiliated with a collective bargaining unit.
Implementation of this policy is the responsibility of the Department of Procurement Services.
The Executive Vice President, Treasurer and Chief Operating Officer is the Drexel University official responsible for the administration of this policy.
Authorized Person: Any contractor, affiliate, trustee or other individual acting in official capacity to carry out the business of the University.
Bona Fide Business Purpose: In order for spousal/companion travel to not be taxable to the employee or authorized person, the presence of the spouse/companion must be essential (not just beneficial) to the University employee or authorized person being able to carry out that individual's business purpose for the University. A determination of whether an employee's or authorized person's spouse/companion serves a bona fide business purpose as defined by the IRS will be based upon, among other factors, the following criteria:
- The degree to which the "dominant purpose" of the travel is to aid the employee's or authorized person's business purpose of promoting the University's objective.
- The spouse/companion's presence on the trip must be necessary to effectively carry out the duties of the employee or authorized person.
- The extent to which the spouse/companion's presence on the trip is to provide more than "incidental" business-related services to the University employee or authorized person (e.g., socializing and attending luncheons/dinners, typing notes, or attending to ministerial or scheduling matters, etc. are considered incidental) for the duration of the travel.
- The time spent by the spouse/companion on personal activities in comparison to the activities related to the business of the University.
Based on current documentation from the IRS, the following purposes for spousal/companion travel are not likely to be considered bona fide business purpose:
- The spouse/companion's performance of some incidental service or ministerial task or accompanying the employee or authorized person to luncheons and dinners. The spouse/companion must perform substantive business-related functions.
- An expectation that the spouse/companion will be present at related social functions or that their presence will promote goodwill with the other attendees.
Companion: Refers to a dependent, domestic partner, other family members, guest or any other individual accompanying an employee or authorized person who is conducting business on behalf of the University.
Domestic Partner: Refers to an individual in a committed relationship with a Faculty or Professional Staff Member of the same gender who is neither married to nor related by blood, adoption or law to the Faculty or Professional Staff Member.
Reimbursement: Payment to the employee or authorized person after the completion of the trip or entertainment, based on documented, reasonable, and actual business travel expenses supported by original, itemized receipts or equivalent documentation.
Spouse: Refers to any individual who is lawfully married to an employee or authorized person under any state law, including an individual married to a person of the same sex who was legally married in a state that recognizes such marriages.
Generally, the University does not pay for or reimburse the travel-related or entertainment expenses (e.g., airfare, hotel, meals, etc.) of an employee's or other authorized person's spouse/companion.
There may be an occasional exception where the University will pay for the costs associated with such travel for a spouse/companion. In those circumstances, the University has identified the travel as having a bona fide business purpose, and the presence of the spouse/companion is essential (not just beneficial) to the employee or other authorized person being able to carry out the business purpose for the University. Although the University may deem certain spousal/companion travel to have an important business purpose, at the same time, such travel may not be considered to have a bona fide business purpose to meet the requirements set by the IRS. In such cases, the expenses associated with spousal/companion travel are not reimbursable or, if paid by the University, the expenses will be treated as taxable income to the employee/authorized person by the University per the IRS regulations.
In the event that any person covered by this policy thinks that travel for a spouse/companion
serves a bona fide business purpose, then that person must request approval in writing prior to the date of the travel for the spouse/companion as detailed below. The Internal Revenue Service has ruled that the expenses of a spouse or other companion accompanying a traveler cannot be reimbursed tax-free if you cannot prove a bona fide business purpose for the individual's presence.
To qualify for an exception, there must be a documented and bona fide business purpose directly benefiting the University and the presence of the spouse/companion is essential to the University employee or other authorized person. Spousal/companion travel will only be paid for or reimbursed by the University if the travel is reviewed and a specific determination is made and approved in advance to determine if there is a bona fide business purpose for the spouse/companion to travel and represent the University. For spousal/companion travel to be considered for application of the bona fide business purpose exception, a request for spousal/companion travel companion reimbursement must be made via the following process.
Requests and all approvals must be fully completed a minimum of thirty (30) days prior to the start of the travel. Any request not following this process will be rejected without further consideration.
- The employee or authorized person must complete the Spousal/Companion Travel Exception Form [PDF]. The requester must provide all details, including the proposed travel location, dates, and the estimated travel expenses; the business purpose of the attendee; duties to be performed by the spouse/companion in order to determine whether there is a bona fide business purpose for the travel of the spouse/companion.
- The Spousal/Companion Travel Exception Form must then be submitted for review and approval by the Office of Tax Compliance PRIOR to any expenses being incurred to determine if a valid bona fide business purpose exists to support the payment or reimbursement of the spousal/companion travel expenses. The completed and signed form should be sent via email to the Office of Tax Compliance at firstname.lastname@example.org. Please allow ten (10) business days for this part of the process.
- The form then requires final approval by the Executive Vice President, Treasurer and Chief Operating Officer.
- Approval and/or rejection will be communicated to the employee or authorized person, by the Office of Tax Compliance.
All reporting, processing and reimbursement will follow the guidelines and requirements found in the Drexel University Business Travel and Expense Policy. The employee/authorized person must attach a copy of the approved Spousal/Companion Travel Exception Form to his or her Travel Expense Reimbursement Report and/or attach to his or her P-Card Reconciliation. If reimbursement for a spouse/companion's travel or entertainment expenses are taxable, the value of the reimbursement will be added to the employee's/authorized person's taxable earnings and the applicable taxes will be withheld from the employee's/authorized person's paycheck. Trustees are treated as employees for tax purposes and would follow the rules outlined above for University employees. The only difference would be the method used to report the taxable income. Trustees would be issued an IRS Form 1099-MISC for the total value of the taxable travel or entertainment expenses.
Violation of this Policy
Violation of this policy and procedure or failure to timely cooperate in complying with its provisions by any individuals traveling on behalf of the University may result in disciplinary action up to and including dismissal. If a P-Card holder has found to have violated this policy, the employee may lose their P-Card privileges.