Effective October 6, 2011, Handbook F-101, Field Accounting Procedures, is revised to reflect the process regarding taxes owed on unreturned business travel advances. If your business travel advance remains outstanding for a period of 120 days after your travel is complete, the Internal Revenue Service (IRS) considers that advance to be reportable compensation, and, therefore, subject to withholding federal income taxes, Federal Insurance Contributions Act (FICA) taxes, and Medicare taxes.
Consequently, the IRS requires employers, such as the Postal Service™, to report any outstanding advances to them, include the amounts in your Form W-2, Wage and Tax Statement, and deduct the appropriate taxes even though you later repay the advance. These regulations apply to both bargaining unit and non–bargaining unit employees. You still must either account for or repay these outstanding amounts to the Postal Service.
Handbook F-101, Field Accounting Procedures
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22 Travel
22-1 Travel Advances for Bargaining Unit Employees
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22-1.3 Repaying Travel Advances
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If your business travel advance remains outstanding for a period of 120 days after your travel is complete, the Internal Revenue Service (IRS) considers that advance to be reportable compensation, and, therefore, subject to withholding federal income taxes, Federal Insurance Contributions Act (FICA) taxes, and Medicare taxes.
Note: If you have any outstanding advance(s) subject to federal income tax from IRS, you will be notified via an invoice statement from the U.S. Postal Service. You will be asked to either repay the outstanding amount or provide reasonable substantiation you used the money for business travel (receipts) as indicated in the invoice statement to U.S. Postal Service Disbursement Office, Eagan, Minnesota.
For additional information, see Handbook F-15, Travel and Relocation, Chapter 10, Getting Reimbursed and Repaying Advances.
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We will incorporate this revision into the quarterly online update of Handbook F-101 available on the Postal Service PolicyNet website:
n Go to http://blue.usps.gov.
n Under “Essential Links” in the left-hand column, click PolicyNet.
n On the PolicyNet page, click HBKs.
(The direct URL for the Postal Service PolicyNet website is http://blue.usps.gov/cpim.)
— Revenue and Field Accounting,
Controller, 10-6-11
