My company is in the process of automating our Corporate Credit Card Process. Can you tell me whether receipts are still required or if the statement itself can serve as the receipt? Do you know what other companies are doing?

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The IRS does have guidelines for the type of documentation required to support deductible business expenses. When using a corporate card for expenses such as travel and entertainment, the IRS requires receipts for every expenditure of $75 or more, and all hotels charges. (Note that many companies require a receipt for any expenditure of $25 or more.)

What the IRS is concerned about is the evidence of the transaction. The following is an excerpt from IRS Publication 463 (click on the link to go to the excerpt:http://www.irs.gov/publications/p463/ch05.html#d0e6382 ), the guidelines that outline the documentary evidence supporting an expense transactions.

"Adequate evidence. Documentary evidence ordinarily will be considered adequate if it shows the amount, date, place, and essential character of the expense. For example, a hotel receipt is enough to support expenses for business travel if it has all of the following information.

  • The name and location of the hotel.
  • The dates you stayed there.
  • Separate amounts for charges such as lodging, meals, and telephone calls.

A restaurant receipt is enough to prove an expense for a business meal if it has all of the following information. The name and location of the restaurant.

  • The number of people served.
  • The date and amount of the expense.
  • If a charge is made for items other than food and beverages, the receipt must show that this is the case.

Canceled check. A canceled check, together with a bill from the payee, ordinarily establishes the cost. However, a canceled check by itself does not prove a business expense without other evidence to show that it was for a business purpose."

Generally a credit card statement is not sufficient if your p-card transactions involve T&E expenses. However, if your report data satisfies the above information requirement, then you should be in compliance. The key is having supportable evidence for the transaction where you can prove that it was a business expense.

Some companies require their employees to attach their receipts to the credit card statement for at least those expenses meeting their minimum threshold. For instance, if a company sets a threshold of $25 for a receipt, then any transaction of $25 or more on the P-Card statement would require a receipt, otherwise the others that were less than this amount may have notes on the P-Card statement as to what the expense was for.

We encourage you to seek the advice of your tax advisors who know your specific situations and what information you receive on your P-Card reports. Also we encourage you to post your question to the Messaging/Forum section of the site to get feedback from your peers on how they handle their minimum documentation for a P-Card.

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