New Year, New Features and Better Usability: Tallie Expense Report Software 11.4 Release Notes

We’re starting the new year off right with a few expense report features that we think will jumpstart your productivity. Rather than having one unifying theme, we analyzed our feature backlog and picked the ones that deliver the most value for the broadest cross section of our clients. Take a look — we hope you enjoy!

New action menu featuring new Transfer Expense and Copy Expense functions

Tallie has always given users flexibility to perform all kinds of extra tasks on purchases prior to submission, but we are now providing centralized access to key tasks and functions in the new expense action menu. Included in this new menu are two new functions: Transfer Expense and Copy Expense.

Tallie Expense Report Software - New Action Menu

The new action menu holds all expense actions under one roof, including the new Copy and Transfer functions.

Transfer Expense

Perhaps you created a free trial by mistake and started importing expenses? Or you mistakenly created an expense in your own account instead of one you manage for another user? Transfer Expense functionality is now available for admins, Executive Assistants, and users with multiple Tallie accounts on the Purchases page, and in the mass edit action bar on Purchases and Expense Reports pages when more than one expense is selected. To transfer an expense, simply hover over the new action menu in the expense tile (also available in Purchases page Table view and Spreadsheet view), and then select an account to receive this expense. For more information, visit our support site and read our article on Transfer Expense.

Tallie Expense Report Software - Copy Expense

Copy Expense and Transfer Expense buttons are also available in the mass edit action bar on the Expense Reports page.

Copy Expense

Do you make purchases at the same store for the same reason? Does your company give you daily spending allowances? If so, the new Copy feature is going to save you a lot of time. Copy is available in the new action menu on the Purchases page, and in the mass edit action bar on Purchases and Expense Reports pages when only one expense is selected. Instead of entering all the details into a new expense, you’ll simply need to select a date to copy the expense to.

Bank Data Delivery now supports MasterCard

In the last release, we introduced our very own Credit Cards integration, Bank Data Delivery for Visa and American Express account holders. We’re excited to announce that this integration now supports MasterCard as well. For more information on Bank Data Delivery, please see Enhanced Corporate Card Control: Tallie Expense Reports Software 11.3 Release Notes.

[Beta] Auto-deduct standard commute from mileage expenses

The IRS has limits on businesses claiming mileage-based business expense deductions, specifically targeting deduction of the distance traveled during an employee’s daily commute. Many companies require employees to deduct their standard commute between home and work from most mileage trips in order to be in compliance with this IRS rule. Standard Commute Beta is here to help streamline the process for the clients who may need it as we gather feedback and continue to improve this feature.

Tallie Expense Report Software - Auto-deduct standard commute from mileage expenses

Tallie memorizes your previous standard commute distance so you’ll simply need to enter the start and end points.

Once Standard Commute has been enabled in your account, users will get an additional field, Standard Commute Distance, in the mileage edit view. The value entered here will be deducted from the Distance In Miles (calculated using the to and from addresses or manually adjusted) to get the Total Reimbursable Distance. Previously used Standard Commute Distance is memorized, so the next time the user creates a mileage, he/she will simply need to enter to and from addresses and the Reimbursable Distance will be calculated. Once the feature is enabled, any mileage expense without a standard commute deduction will be flagged as such.

Tallie Expense Reports Software - Standard Commute Badge

Once the feature has been enabled in your account, mileage expenses without standard commute deduction will be flagged.

This feature is currently in beta mode and will be released to our general user base after we receive feedback from our early evaluators and make further improvements. If you’re interested in being a part of the beta team, please contact our Product Experts and we will enable the feature for you.

Product enhancements & fixes

  • List of monthly active users is now available: Billing admins can now see a list of monthly active users to date at the bottom of Usage & Pricing tab in Regular enterprise, or Reseller Management tab in Affiliate enterprise (click on the individual Resold account to view active users for it).
  • Fixed QBO export issue where users were unable to export expenses with Projects when Billable feature is disabled in QBO.
  • Fixed the issue where end users were unable to see credit card profiles that have errors.
  • Fixed mobile issue where adjusted mileage distance would revert back to Google calculation on save.

We look forward to hearing how these upgrades have made managing your expense reports even easier. If you have any questions or comments, feel free to reach out to our Product Expert team at support@usetallie.com or by calling 888-874-1118 Ext 2.

Use Tallie’s Expense Reports & Internal Controls to Stay IRS Compliant Year-Round

A 2014 study by the Association of Certified Fraud Examiners estimates that organizations lose an average of 5% revenue to fraud each year. Without strong internal controls, a company is at risk for theft, misappropriation of funds, and a major audit. Here’s how to use Tallie’s automated expense reports to prevent fraud and stay IRS compliant year-round.

Create (and automatically enforce) thorough company policies.

You cannot prevent expense fraud without first establishing clear, specific company policies. For example, you may permit employees to expense WiFi fees at a conference, but only up to $20 a day. Of course, even the most thorough policy is useless unless it’s properly enforced. Miscommunication, a lack of awareness, and ineffective management can expose a company to fraud and a potential audit.

Historically, the reinforcement of these policies has been tedious and time-consuming. Accountants had to manually respond to violations, re-educate employees about the company policy, and then wait for a corrected expense report. Now, modern expense report software eliminates the need for these manual processes.

Companies that automate internal controls not only save time and cost, but also decrease the likelihood of fraud. Tallie’s policy engine lets you create custom expense policies based on category, dollar amount, project, class and more. Any expense that violates these policies is automatically detected, and the employee is notified immediately.

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If an employee doesn’t understand why their expense was in violation, they can simply click the “Out of Policy” alert to learn more. This not only prevents unnecessary errors, but helps ensure that employees remember the company policy while making future purchases.

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Keep expense reports IRS-compliant with timely and accurate records.

IRS Publication 463 requires that your records be not only accurate, but timely:

“You should record the elements of an expense or of a business use at or near the time of the expense or use and support it with sufficient documentary evidence.”

(Publication 463, Cat. No. 11081L, Page 26)

Submitting your expense reports with Tallie satisfies both of these requirements. In the event of an audit, the IRS will expect you to provide consistent and complete records of all purchases and reimbursements, complete with legible receipts. To ensure you’re recording “sufficient documentary evidence,” we recommend using Tallie’s policy engine to require a receipt for any expense over $75, as per IRS document 463, chapter 5.

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One of the major benefits of expense report software like Tallie is the ability to throw away your receipts after you’ve captured their image. But will the IRS really accept a picture of a receipt in lieu of the original?

Believe it or not, the IRS has actually accepted electronic documents, including scanned receipts, since 1997 (IRS Revenue Procedure 97-22). In order to be considered valid, the receipt (or receipt image) must include the merchant’s name and address, the transaction date, the amount paid, and the business reason for your purchase. All of this information can be stored within Tallie for easy access in the event of an audit. No more hunting through shoeboxes!

Tallie also allows you to store your receipts within your chosen accounting system. Exports to QuickBooks Online and Intacct include your receipt images as part of an attachment to the Bill (Intacct) or Bill/Check/Expense (QuickBooks Online.)

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QuickBooks Desktop users can take advantage of our direct integration with SmartVault, where their electronic documents can be stored and retrieved on demand.

Tallie is the best expense management solution for strengthening your business’s internal controls. You create your custom policies within Tallie–we’ll automatically enforce them. Want to see how? Schedule a free, 1-on-1 product demo with one of our experts.

Tallie’s 2015 Tax Season Manual

Long hours, stress, and incredible deadlines–the 2015 tax season is well underway. Wish you had some straight-forward accounting advice? We’ve got you covered. Enjoy this selection of blogs about tax code, the IRS, and getting through the 2015 tax season in one piece!

Tips for Surviving (and Thriving) During the Busy Season

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Sometimes, when faced with a crushing deadline at work, our healthy habits are the first things to go. You don’t always have to sacrifice your sanity in order to make it through the busy season. We’ve catalogued ways of caring for your mind and body that will not only help you feel better, but are proven to boost the quality of your work.

Four Things You Need to Know About Deducting Business Gift Expenses

Tallie Blog Business Gift Deduction Expense Reports

Just as you can expense business meals and entertainment, you may also deduct a portion of the amount you spend on gifts for colleagues, clients, and employees. But there are limitations as to who you can give to, what you can give them, and how much of a deduction you can receive in return. Here are four things you need to know about successfully deducting business gift expenses.

Let Us Entertain You: Tips for Deducting Your Business’s Meal and Entertainment Expenses

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Entertainment expenses, such as the cost of meals and shows, are subject to particular scrutiny from the IRS. The complicated, ambiguous rules surrounding these kinds of expenses can make it difficult for business owners to know which costs are deductible. We give you a better idea of what qualifies as an entertainment expense, and how it can be successfully deducted.

Tallie Q&A: Mileage Tracking, Expense Reports and the IRS

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Nothing attracts more scrutiny from the IRS than business mileage expenses. But are the records required for deductions the same as the ones for reimbursement? How do you know which records to keep? Here are answers to some common questions from Tallie users.

Looking for ways to save time this tax year? Tallie’s expense management software automates expense reports from start to finish.

Try Tallie’s powerful expense management software FREE for 14 days – no credit card or commitment required. Give it a try by signing up today. Care for a walkthrough by a trained expert first? Contact us to schedule your free Tallie product demo now.

Four Things You Need to Know About Deducting Business Gift Expenses

Everyone knows it’s better to give than it is to receive, right? Well, when it comes to your business, it turns out that you can do both at the same time. Just as you can expense business meals and entertainment, you may also deduct a portion of the amount you spend on gifts for colleagues, clients, and employees. There are, however, some limitations as to who you can give to, what you can give them, and how much of a deduction you can receive in return. So whether it’s a basket of holiday cookies or tickets to a Beyoncé concert, here are four things you need to know about successfully deducting business gift expenses.

Tallie Blog Business Gift Deduction Expense Reports

1. You can only deduct up to $25 per business gift.

We know you love your client almost as much as your client loves that gold-plated basket of pears. But as far as the IRS is concerned, you can deduct no more than $25 for each business gift per recipient for each tax year. It doesn’t matter whether you send that gift directly to your client, to their department, or to a member of their family. That $25 limit applies to everyone that may have benefited from your gift, even indirectly. However, if you send a set of gold watches to Mr. and Mrs. Smith, you will still be allowed to deduct $25 from each, provided that you have a separate (work-related) connection to each spouse.

2. You can’t deduct incidental costs.

Let’s say you’ve found that perfect gift for your IT department. While you always have the option of plopping it down in the middle of their desks unadorned, you’re probably going to want to wrap it first. Not to mention, giving gifts to partners at other companies means paying for shipping and handling. Know that in most cases, packing and mailing costs are considered “incidental,” and cannot be deducted. But if the packaging is considered to be part of the gift, like a hand-woven tote, its cost can be included in your deduction. Think the difference between wrapping paper and a decorative basket. Incidental costs may also refer to additional features that enhance the gift without substantially increasing its value–such as engraving.

3. Pens for everyone!

Certain kinds of items are considered to be exceptions to the $25 rule, and will not be counted towards your business gift expense limit. For example, you don’t need to include any widely distributed items that bear your name so long as they cost $4 or less. These small gifts most often manifest as pens, frisbees, and stickers with your company’s logo on them. Other strictly promotional items, such as signs or giant cardboard cutouts for display in your recipient’s storefront, are also not considered “gifts” for the purposes of the $25 deductible.

4. Are you not entertained?

According to the IRS, “any item that might be considered either a gift or entertainment generally will be considered entertainment.” (IRS Document 463 Ch. 3) So when in doubt, err on the side of an entertainment expense. But let’s say you give a client some tickets to an upcoming concert. If you attend the concert together, the cost of admission is automatically considered an entertainment expense. But if your client goes without you, you get to choose whether those tickets will be filed as entertainment or as a business gift expense. You are also free to change your mind about how to classify the expense, even after its been submitted to the IRS. If, after deducting the tickets as a gift, you determine that it would be more accurate (or more beneficial) to expense them as entertainment, you have three years to file an amended return.

You can keep track of all your business expenses, including business gifts, with Tallie’s award-winning expense report automation software. See how we can improve and simplify your accounting workflow FREE for 14 days – no credit card or commitment required. You can also schedule a product demo with one of our experts to help determine the best workflow for your business.

Let Us Entertain You: Tips for Deducting Your Business’s Meal and Entertainment Expenses

Taking a client out to dinner may be as common a business practice as buying a plane ticket, but deducting it can be a whole other story. Entertainment expenses, such as the cost of meals and shows, are subject to particular scrutiny from the IRS. The complicated, ambiguous rules surrounding these kinds of expenses can make it difficult for business owners to know which costs are deductible. We here at Tallie wanted to help cut through the ambiguity and give you a better idea of what qualifies as an entertainment expense, and how it can be successfully deducted.

Entertainment and meal expenses

First, the entertainment must be considered ordinary and necessary. While these terms may sound a little vague, in this case, “ordinary,” simply means that the form of entertainment is commonly practiced within your trade. A round of golf with a potential client? Sure. An extravagant dinner complete with a $600 bottle of wine? Probably not going to fly. And despite what it sounds like, “necessary,” does not actually mean that your company’s success hinges on your picking up the dinner tab–the IRS only requires that it be demonstrably helpful for your business.

Next, your expense must meet one of two tests in order to prove that the entertainment is “closely related” to work:

1. The “directly-related” test.

In order to pass this test, you need to be able to prove that “the main purpose of the combined business and entertainment was the active conduct of business.” (IRS Publication 463: Ch. 2) In other words, unless the festivities took place in a “clear business setting,” you must have had real reason to believe they’d lead to a specific benefit for your business, such as increased income, or a partnership with a new supplier.

A clear business setting can be a number of places, such as a designated booth at a convention, or even an office breakroom. Of course, there’s only so much entertainment to be had around a water cooler. For all other venues, not only must the “main purpose” of the expense be the active conduct of business, the location must be distraction free. It doesn’t matter how hard your team toiled away on those spreadsheets in the middle of the club last night–if you couldn’t hear each other over the music, it probably wasn’t a very productive meeting.

2. The “associated” test.

This test can be much easier to pass. According to the IRS, your entertainment expense may be considered deductible if it was “associated with the active conduct of your trade or business,” (IRS Publication 463: Ch. 2) AND if it occurred “directly before or after a substantial business discussion.”

How direct is directly? Essentially, the discussion (ie: meeting, negotiation, etc.) must take place on the same day as the entertainment. Exceptions can be made in extenuating circumstances–if your clients are coming in from out of town, for example, or if strict venue scheduling requires an event to take place the following evening. Whether these extenuating circumstances are approved, or whether the business discussion is deemed sufficiently substantial, is solely up to the IRS. You should always be prepared to explain how the discussion benefitted your business, as well as any working relationship with the client or business associate.

Generally, if your entertainment expenses meet the above requirements, they can be deducted for 50% of the total cost. That being said, there are a number of circumstances in which the 50% rule does not apply. If you provide food and entertainment for the general public on behalf of your business, this is considered as either advertising or a means of “promoting good will.” And, of course, if you went to the movies in your capacity as a professional film critic, the cost of admission would be considered a fully deductible business expense.

Which forms of entertainment are just plain not deductible? Well, you may not deduct the cost of leasing a facility designed exclusively for entertainment, such as a yacht or a hunting lodge. Nor can you deduct membership dues for any golf or country clubs. And when it comes to lavish or extravagant dinners, you may only deduct 50% of what the IRS determines to be a reasonable cost. If you spent $1,000 on a dinner that should only have cost you $100, you will probably only be able to deduct $50, as opposed to the full $500.

For more details, you can look to our previous post on what the IRS considers to be lavish and extravagant vs. ordinary and necessary expenses. This is especially important when deducting business gift and entertainment costs. As makers of expense report automation software, we understand it’s sometimes difficult to know which entertainment costs can be expensed and which don’t qualify. While it might be frustrating that the rules for what’s acceptable aren’t always cut and dry, just remember that common sense and frugality will go a long way.

Save valuable time with Tallie’s award-winning expense report automation software. See how we can improve your accounting workflow FREE for 14 days with no credit card or commitment required. Want some one-on-one help from our trained product experts? Schedule your free Tallie product demo today!

Tallie Truths: Top 4 True & False Facts About Digital eReceipts, Expenses and the IRS

When it comes to the IRS, recordkeeping, and reimbursements, you would think that the process was black and white. Instead, IRS publications on recordkeeping and reimbursements are a world of gray. In this edition of Tallie Truths, we expose what is fact and fiction in the world of eReceipts created by an expense software system in terms of audit preparedness. Read more to learn about the facts and industry best practices to prepare for a potential IRS audit. Enjoy!

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#1: eReceipts and credit card statements are acceptable proof for a $50 business meeting expense.

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IRS Publication 463 Ch5: “Documentary evidence is not needed if your expense, other than lodging, is less than $75.”

Ereceipts and credit card statements are acceptable for expenses, other than lodging, less than $75. This is because the IRS does not require any documentation for non-lodging expenses less than $75.(IRS Publication 463 Ch 5) This means after a purchase is expensed using Tallie’s credit card feature, the IRS will not require a documented copy of your receipt for tax deduction purposes. So if you lost the Safeway receipt for that case of sparkling water you bought for last week’s Board of Directors meeting – don’t stress!

That being said, there is a very gray area in regards to what the IRS considers necessary business expenses. For example, the IRS may not blink at a $70 bill at Kinko’s, but may reject a $70 bar tab for a client meeting , deeming it “lavish and extravagant.” Team Tallie suggests you do not push the limits and stick with only claiming the most necessary business expenses. This is particularly important when dealing with business gift and entertainment expenses.

#2: eReceipts and credit card statements can be submitted for a work conference hotel bill that is not paid with a per diem.

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IRS Publication 463 Table 5-1

For all lodging expenses – a business trip hotel stay, temporary housing if you move cross country for a new job, and any other necessary lodging for business related activities – a documented receipt IS required by the IRS. The only exception would be if these expenses were covered by a company per diem.

#3: Ereceipts and credit card statements are acceptable for a 30 mile drive to a new customer site visit.

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IRS Publication 463 Ch5: “Documentary evidence is not needed if you have a transportation expense for which a receipt is not readily available.”

Say you need to hop on CalTrain to drop off a contract at a new client’s office, or drive an hour north for a 3-day industry conference. If you need to replenish your gas tank because of this work commuting, the IRS does not require you to obtain a receipt of these gas purchases. An electronic receipt or credit card statement is sufficient. It should be noted that mileage/fuel costs are only reimbursable to the extent that the cost goes above and beyond the individual’s normal commute.

#4: In the event of an audit, the IRS will accept eReceipts and credit card statements for purchases over $75

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IRS Publication 463 Table 5-1

Remember that case of sparkling water you bought earlier? Well, let’s say you also bought $100 worth of gourmet foods for the meeting to impress the board. The IRS has no way of proving this trip wasn’t for your own personal groceries with a simple credit card statement.  For this purchase you would need a documented and reliable receipt to prove the expenses were business related.

Are you 100% Audit Ready? Start your own Tallie journey by signing up in 2 seconds flat. Use Tallie’s powerful expense management software FREE for 14 days – no credit card or commitment required. Give it a try by signing up today. Care for a walkthrough by a trained expert first? Contact us to schedule your free Tallie product demo now.

Scared Straight: Expense Fraud & 5 Ways to Prevent It

Airfare for a cancelled flight. A $50 travel meal of Ketel and sodas. Pay-per-view movies lumped into the nightly hotel room rate. Expense fraud is easily overlooked due to its seemingly insignificant financial impact relative to other risks a business faces day to day.  When committing expense fraud or turning a blind eye on an incident, it’s easy to believe a few bucks here and there won’t hurt but there is more to consider. Expense fraud affects companies far beyond the financial realm. It deteriorates ethical culture and could evolve into very serious problems if an organization ever undergoes an IRS audit. In fact, companies typically lose 5% of their revenue to fraud each year, resulting in $3.5 trillion projected to be lost globally (Association of Certified Fraud Examiners, “2012 Report to the Nations”).

Without clear and firm guidelines of expense reports, employees are left making assumptions and are more likely to inflate or submit fictitious expenses. Moreover, lack of proper documentation may result in prosecution if the company undergoes a regulatory audit.

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If you’re worried about this often overlooked threat – we’re here to help. Follow these 5 easy steps and protect your company from falling victim to expense fraud:

1) Establish and enforce detailed policies for expense report submission

Define your company’s set of expense report rules. Some examples include: expense report submission within # of days post transaction; receipt requirement for expenses over $25; hotel receipt itemization coded to its respective category (pay-per-view movies go under “Entertainment,” and room service belong to “meals”), etc. With today’s latest expense report software, you can create custom policies by project and enforce expense dollar limits by category, by day or by item. The more specific the expense policy, the safer you’ll be from questionable reports or rejections, and faulty employee assumptions.

2) Have backup plans in case of an inadvertent internal policy violation

The reality is that exceptions may occur regardless of the clear guidelines. You have the choice to immediately reject the expenses, or have a protocol that specifically deals with situations like this. We recommend the latter, as the first indirectly encourages employees to provide falsified proof in order to make their expenses fly. We recommend an expense report software with out-of-policy options that immediately alert the employee of violations prior to submission – so you don’t have to waste time manually checking.

Example scenario: an employee was running late to a conference and forgot to ask for a receipt for his taxi ride. Considering a receipt is a requirement for ground transportation, what other evidence can this employee supply in place of the missing receipt?

3) Design and carry out proper expense review procedures

An effective expense review flow should involve the project manager or a supervisor, as she is familiar with what expenses are required and can spot suspicious transactions more easily. In addition, it’s ideal to have a secondary review of the expenses by a finance or accounting associate before reimbursing the employees. Rather than focusing on each expense’s necessity, this secondary reviewer identifies any noncompliances with the company’s expense policies and ensures the integrity of supplemental documentation in case of an internal or tax audit. Custom approval routing is a critical expense report software feature to invest in that automates and customizes expense review and approval based on your company’s policy.

4) Utilize data analytics to stay on top of expense reporting trends and reimbursement status

Graphs and charts are handy when it comes to viewing the distribution of expense reimbursements by category/employee/projects, etc. Maintaining a consistent expense reporting practice and staying on top of the reimbursement status also minimizes the chance of delayed or duplicate reimbursements.

5) Investigate when necessary, and remember, it’s all about the “tone at the top.”

The best practice to prevent expense fraud is diligent review, however, some perpetrators might still fall through the crack despite your best efforts. Therefore, it’s crucial to communicate company guidelines and educate the consequences of expense fraud to the employees. Two guidelines we recommend: 1) clearly convey every expense policy violation – small or large – will have consequences; and 2) demonstrate equal treatment across all levels of expense policy violators. After all, copycat behaviors are common at the workplace, and establishing the right “tone at the top” would help foster good ethical culture across the entire organization.

When considering the expense software solution that not only streamlines your company’s workflow but also safeguards you from expense fraud, Tallie successfully does both. A user-friendly mobile app, automatic data import, smart matching and categorization make expense report creation a breeze; while Tallie’s duplicate expense auto-alerts, immediate, “along the way” out-of-policy flags, custom expense limits, and policy-based approval routing will keep expense fraud incidents at bay.

Which of these 5 tips are you and your company following to protect against expense fraud?

Alcohol Expenses: What’s Lavish & Extravagant vs. Ordinary & Necessary?

Alcohol as a beverage has been around for ages, with some of the earliest documentation dating back to 7000 BCE. That means that humans have been consuming alcohol for over 9,000 years! Now, the relationship between alcohol and societies has seen its ups and downs. The spectrum ranges from ancient cultures worshiping gods centered around alcohol to the U.S.’s modern-era Prohibition. Some could argue that a lot of greatness came from the convergence around alcohol, like the building of nations and the works of Ernest Hemingway and Edgar Allan Poe. While others could argue to the destruction it can cause, like the tens of thousands of deaths every year that are due to alcohol related incidents.

So, where does that leave us with alcohol’s role in the modern business world?

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I know it, and you know it. Alcohol is in business. Now, by no means should alcohol consumption be pressured upon anyone, but it’s something that is very commonplace in society. A 9,000 year old habit won’t die easily.

According to Publication 463 by the IRS, a business-related meal expense “include(s) amounts spent for food, beverages, taxes, and related tips.” The terminology used by the IRS on this topic is actually quite vague, and leaves a lot to the individual auditor’s opinion in terms of acceptable beverages. Never in the publication does it state a specific quantity or dollar amount as “the line.” So, it’s hard to say exactly what is ordinary and necessary versus lavish and extravagant when it comes to expensing alcoholic beverages.

When discussing this topic with my CEO, Chris Farrell, we both agreed that taking Richard Branson for a business meal and expensing a $500 bottle of wine for the three of us would probably get the “OK” from the IRS. But, doing the same for an average client would likely not pass. This would suggest the qualification of “ordinary and necessary” is largely scenario-based.

Now consider taking a client to dinner and drinks, then expensing $100. The IRS probably won’t bat an eye. But, if you spend $500 on that same client, the expense might not pass. In this case, the qualification of “ordinary and necessary” is dollar-based.

But, what if you buy multiple drinks for $50 or, in the same scenario, buy a single bottle of wine for $100. In this situation, the pass/fail will probably fall on the quantity of alcohol.

Confusing, right?

Now picture your own scenario. Is your alcoholic expenses judged on scenario, price, or quantity? Not only are the guidelines nondescript, but now there are three separate “options” for which your expense on alcohol can be deemed lavish or ordinary.

Expensing alcohol is an extremely tricky process and there’s no black and white cut-out for you to reference. So while we tackle the last of our 2013 IRS Tax Returns and come across those very vague alcohol related instances, remember this: when in doubt, don’t expense it.

Have you experienced a situation that involved expensing alcohol? Leave your questions and stories in the comments below!

Top 5 Tips for IRS Record Keeping & Expense Management

Have questions about best practices relating to expense management? Tallie serves as a powerful receipt repository, so our Product Expert Team is well-versed in the do’s and don’ts of record keeping. Essential to any business, record keeping and proper documentation is critical to an optimized expense report workflow.

Fortunately, IRS regulations have evolved technologically, and electronic records can now directly replace hard copies. Gone are the days of filing cabinets stuffed with paper receipts! If an electronic system can efficiently and reliably house a complete reproduction of hard copy records, the IRS approves of businesses ditching paper copies. Here are some of the most common questions that the Tallie Product Expert Team receives regarding keeping records:

1. How long do I have to keep my records?

As a rule of thumb, CPAs tend to follow a 7-year rule (CPA.Net), although the IRS only requires that records be kept for as long as the tax return can be amended. There are regulations surrounding what changes can be made to a tax return post-deadline, including how long companies must retain records. For example, if you filed and paid your taxes on time, you have 2 years to file a claim for a refund. You would have to keep your records for that 2 years.

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2. Do you know of any instances where a receipt would not be required?

There are two examples in IRS Publication 463: If your expense, excluding lodging, is less than $75 OR if you have a “transportation expense for which a receipt is not readily available.”

3. Are there different documentation requirements for different types of expenses?

Yes. For example, for entertainment expenses a record must include the specifics (cost, date, location, description of type of entertainment) in addition to a description of the business purpose for the entertainment, the people that were in attendance, their business relationship, and whether or not your employee was present at the entertainment.

Conversely, gifts only require a record of the cost, the date it was purchased, and a description of the business gift. Here are additional details on what is required to prove specific types of expenses:

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Generally, as long as the record has the date, amount, merchant and any additional pertinent details, that should suffice (IRS table 5-1, pg 26). Most receipts have all of that information; however, Tallie transaction tiles  also have text field “Reasons” where additional information can be added. Companies that use Tallie can easily pull the address from the receipt image or look up attendee names in their CRM system.

4. Are there any types of expenses that I can combine to reduce the amount of records I have to keep?

Yes, there are a few types of expenses that can be combined. If you are traveling and take multiple taxis throughout the day, they can be combined into one taxi expense. Also, if you take a client out for drinks, even if you pay for each round separately, you can combine them into one expense.

5. Are my cancelled checks sufficient records for expenses?

No, not as the sole piece of evidence. Cancelled checks do have to be accompanied by a bill from the party the check was written to or some other form of documentation.

In the spirit of tax season, the Tallie Product Expert Team would like to know what questions you may have regarding proper record keeping and expenses best practices. Leave your questions in the comments below and we will reply immediately!

Top 5 Tallie Expense Report Support Questions and Answers

Tallie Top 5 Support Questions-expense-report

At Tallie, our Product Expert Team spends their days listening, advising and guiding our clients. And with a 99.9% Apdex score under their belt, they successfully field numerous support questions every day. From exporting issues to implementations, the team tackles a wide variety of topics. Today, our Product Experts are here to share the most frequently asked support questions and the answers that guide our clients toward an ideal resolution.

“What’s the best way to guarantee that submitted expense reports are authorized for reimbursement?”

Create a detailed approval flow by assigning a personal supervisor, project manager or global approver. This detailed flow ensures that expenses incurred are correct and allowed. Additionally, empowering approvers to certify expense reports expeditiously through their email, will help guarantee their cooperation.

“I’ve misplaced two corporate credit card receipts from last month’s business trip. What are my options for keeping track of these charges?”

Automatically download corporate credit card transactions to account for these charges. Use a receipt match feature, which reconciles incoming receipts to downloaded transactions and keeps everything in sync. A central repository for receipts also keeps the necessary documentation on hand for billing or audit purposes.

“The IRS requires receipts for expenses above $75. What is the best way to encourage employee compliance?”

Create custom, specific policies surrounding expense report submission to raise awareness of these requirements. These policies provide alerts to expense submitters and helps them consistently adhere to these regulations.

“What is the advantage of requesting my expense submitters to add a project to their expenses?”

Project classification in expense reports increases the visibility of specific expenses, allowing your team to bill your clients accurately. For employees who frequently travel, racking up both business travel and client related expenses, adding projects to specific transactions directs these expenses to the appropriate client for billing and reimbursement of the employee.

“Why should Reimbursable and Non-Reimbursable transactions be combined on a single report?”

Tallie’s goal is to make expense reports simple, accurate and efficient. A single expense report with both reimbursable and non-reimbursable transactions achieves this goal.

Here’s how it works:

– Add reimbursable and non-reimbursable purchases into the system, organize transactions to align with company policies, and submit for approval.

– Reimbursable entries are classified in the accounting system as a check or bill. Corporate expenses are sent over as credit card charges against the appropriate registers.

Tallie’s expense software solution easily addresses these 2 transaction types when exporting and provides greater efficiency and accuracy throughout the entire expense management process.

 

Do you have a question, comment or concern for our Tallie Product Expert Team? Ask it here and they’ll be happy to help.