Nonprofit Law/501c3 Coach Expense Reimbursement
Thank you so much for your time you in answering all of these questions!
1. We are a 501c3 gymnastics booster club. As most booster clubs do, we pay travel expenses for coaches to attend meets with the team, as the gymnasts may not compete in the meet without a coach present. It is a necessary business expense. Our girls also travel to summer/fall training camps within their region. Coach representation is not mandatory for gymnast participation. Is it OK for the booster club to use funds to pay coach travel expenses to work these regional camps, even though their presence at the camp is not required in order for the gymnasts to train?
2. Specifically what is required to be turned in for an expense reimbursement plan to be considered "accountable" for meals and mileage (other than a simple report with date, name of meet, location of meet noted).
Thank you for your time!
The IRS rule for what nonprofits may spend money on is similar to
the standard that the IRS uses when determining what is a valid
business expense for an ordinary business. For example, at
the IRS refers
extensively to the regular business expense rules and applies them
to 501(c)(3) organizations. On page 32 we see "Reimbursements are
technically covered by Regs. 1.62-2. However, for administrative
purposes, all TE/GE [Tax Exempt & Government Entities Division]
administrative personnel will treat reimbursements of a business
expense the same as if the expense were paid directly by the
employer, as long as the employee complies with the substantiation
on page 3, under "What Can I Deduct":
--start of excerpt ---
To be deductible, a business expense must be
both ordinary and necessary. An ordinary ex-
pense is one that is common and accepted in
your industry. A necessary expense is one that
is helpful and appropriate for your trade or busi-
ness. An expense does not have to be indispen-
sable to be considered necessary.
--end of excerpt ---
It appears from what you wrote, that it is helpful to the gymnasts if the coach is at the regional camps assisting them.
See page 41 of IRS Publication 535 at
starting in the first
column under the heading "Accountable Plans" which the organization
must have. That section is written for employees but also applies
See the section under "Volunteer Officers/Workers" at
which is written specifically for Exempt Organizations and refers
to that Publication 535.
---Start of Excerpt--
A plan under which an employee or volunteer is reimbursed for
expenses or receives an allowance to cover expenses is an
accountable plan only if:
* There is a business connection for the expenses;
* The employee/volunteer adequately accounts for these
expenses within a reasonable period of time; and
* The employee/volunteer returns any amounts of excess
expenses within a reasonable period of time.
---End of Excerpt--
Details follow on from that page 41 of Publication 535. On the right column of that page the IRS instructs:
--- Start of excerpt ---
They must give you documentary evidence of their travel,
mileage, and other employee business expenses.
This evidence should include items such
as receipts, along with either a statement of expenses,
an account book, a day-planner, or
similar record in which the employee entered
each expense at or near the time the expense
-- End of excerpt ---
Attorney at Law
P.S. This response is intended to be a general statement of law, should not be relied upon as legal advice and does not create an attorney/client relationship. For me to consider your individual situation and how the law applies, I would need to gather more information.