What is the common practice for reimbursing expenses for outside consultants and independent contractors? Is it correct to require and enforce the company T&E policy and limits?
“The answer to your question is a management business decision. There are a few IRS guidelines such as whether the company policy for the contractors and consultants uses an accountable plan or non-accountable plan. See IRS Publication 463 for definitions and rules for about these two types of plans. It also depends on how your contractors and consultants bill you back for their expenses. If they do not break out their fees from reimbursable expenses, then you would have to report the full amount on a 1099 if they are subject to 1099 reporting. It is easier to apply the same limits, procedures, and policies to contractors and consultants as you do for your internal employees. A consistent set of rules for both groups helps your A/P organization process more efficiently and avoid having to keep in mind different rules and guidelines if you have two different policies between contractors/consultants vs. employees. TAPN has a full T&E Manual that outlines procedures and policies that can
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