Costs and Finances

FinACE: Short Term ARP

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• USA
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• Short Term ARP
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• Long Term ARP

Overview

Generally, all payments to taxpayers are considered taxable income unless excluded by a specific Internal Revenue Code Section. Internal Revenue Code Section 62(a)(2)(A) provides an exclusion from taxable income for reimbursements for expenses made by Corporations pursuant to a reimbursement Plan that complies with the requirements of Internal Revenue Section 62(c). Mercy Ships recognizes the need to attract and retain qualified employees, volunteers and independent contractors (hereinafter collectively referred to as "staff"), and the need to reimburse staff for qualified expenses. Moreover, Mercy Ships desires that these reimbursements not be considered taxable income to staff. Accordingly, Mercy Ships does hereby adopt the following Mercy Ships Accountable Reimbursement Plan (hereinafter referred to as the "Accountable Reimbursement Plan" or the "Plan").

Benefits of a Reimbursement Plan

This Plan allows Mercy Ships to reimburse staff for qualified expenses. Such reimbursements benefit the staff due to the following:

0. Qualified ARP reimbursements are not subject to federal income taxes, the Federal Insurance Contribution Act or the Self Employment Contribution Act
0. The reimbursements avoid the limitations on certain deductions (such as the rule that allows only 50% of the cost of meals to be deducted on an individual's tax return).
0. This plan allows accounting to the employer, thereby reducing the need to account to the Internal Revenue Service.

Policy

It is the Policy of Mercy Ships to reimburse staff for qualified expenses. Qualified business expenses shall include those ordinary and necessary business expenses:

a) incurred by staff in their capacity as staff;

b) incurred in the normal course of business;

c) for which adequate accounting is provided; and

d) submitted for reimbursement on a timely basis.

This Policy shall not be construed to require Mercy Ships to reimburse any expense. Mercy Ships retains the right to deny reimbursement for any expense that it deems not in accordance with this Plan.

CAUTION: Any reimbursement request not submitted on a timely basis will be denied. Reimbursement will be for the cost of the item purchased and must be substantiated by a detailed receipt (not a summary receipt). In no event, should a claim for reimbursement ever exceed the actual cost to the staff

Modifications or Termination of Plan

Mercy Ships reserves the right to terminate or modify this Plan without notice. Any temporarily restricted funds held as of the date of termination shall revert to the General Fund of Mercy Ships.

Ownership of Funds

Funding for these reimbursements may come from general funds or from temporarily restricted funds (ARP accounts) maintained for the employee by the employer. All money held in the general fund and the ARP accounts remains the exclusive property of Mercy Ships. Mercy Ships retains the sole right to make decisions regarding the payment or denial of claims under this Plan.

Conformity with United States Tax Laws

This Plan is designed to exceed the existing requirements of the Internal Revenue Code and related regulations for accountable reimbursement plans. Any provision in this Policy deemed to be inconsistent with current Federal tax laws and regulations shall be deemed null and void and the provisions of the current tax law shall prevail.

Forms

Mercy Ships Accountable Reimbursement Expense Report Form For Short Term Crew

Definitions

ARP Accounts - Mercy Ships funds which are temporarily restricted to reimburse staff for qualified expenses. A book entry may be posted to reflect the name of the staff for which the funds are temporarily restricted. However, Mercy Ships retains ownership of the funds until a request is made for reimbursement of qualified expenses and Mercy Ships determines the expenses are eligible for reimbursement under this Plan.

Away from tax home - For purposes of this policy, you are traveling away from your tax home if:

a) Your duties require you to be away from the general area of your tax home substantially longer than an ordinary day's work; AND

b) You need to sleep or rest to meet the demands of your work while away from your tax home.

Business Expense - Any expense that is reimbursable in accordance with this plan. This term applies equally to expenses incurred in the conduct of business as well expenses incurred in support raising and the development of potential donors.

Deputized Fund Raiser - Individuals that have made a commitment to work to achieve the mission of Mercy Ships and who meet the following criteria:

a) The staff member has met with FinACE representatives and completed a budget.

b) The staff member has negotiated an Agreement of Funding.

c) The staff member is authorized to raise funds on behalf of Mercy Ships.

FinACE - FinACE is an acronym for Financial Accountability, Coaching and Encouragement, which is a branch of the Chaplaincy.

Internal Revenue Code - All references in this Plan to the Internal Revenue Code shall refer to the Internal Revenue Code of the United States of America. (Also referred to as Title 26 of the United States Code.)

Listed Property - Listed property shall be defined to include the items listed in Section 280(f) of the Internal Revenue Code. This generally includes passenger automobiles, other transportation property, property of a type generally used for entertainment, recreation or amusement purposes, any computer or peripheral equipment and cellular telephones.

Ordinary and Necessary Business Expenses - An ordinary expense is one that is common and accepted in your business. A necessary expense is one that is helpful and appropriate for your business.

Religious Order Member - For purposes of this policy, any staff that has committed to two years or more of service with Mercy Ships, raises support and is employed by Mercy Ships Associates.

Tax home - For purposes of this policy, your "tax home" is your permanent place of business, employment or post of duty. The IRS has issued Revenue Ruling 93-86 in which they have ruled that if you accept an out-of-town assignment for a period of one year or more, the location of the out-of town assignment becomes your tax home, regardless of where you maintain a residence.

Timely basis - The Internal Revenue Service has defined timely basis as follows:

a) If you incur an expense, you must submit your expenses to Mercy Ships within 60 days of the date of the expenditure.

b) If you receive an advance, you must expend the funds within 30 daysof the day that you receive the advance.

c) Excess reimbursements must be repaid within 120 days after the date the expense was incurred.

Example: You purchase a plane ticket that you will use within two months. You must request reimbursement within 60 days.

Timely Kept Records -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. A timely-kept record has more value than a statement prepared later when generally there is a lack of accurate recall. You do not need to write down the elements of every expense on the day of the expense. If you maintain a log on a weekly basis that accounts for use during the week, the log is considered a timely-kept record.

United States - For purposes of this policy, the United States shall include the 50 States plus the District of Columbia.

Summary of Expenses Qualifying for Reimbursement

Expenses that qualify for reimbursement under this plan are varied and include, but are not limited to, the following:

1) SUPPLIES

Most general business supplies are reimbursable under the plan. The IRS regulations require additional record keeping for listed property. This policy does not require the record keeping for listed property as required by the IRS; therefore, listed property and related supply items are not reimbursable under this policy.

Items to include:

• Cost of items to produce newsletters, such as stationary and copying
• Cost of donor relations materials such as Mercy Ships DVDs, videos and books, where the purpose is the direct support of your ministry.
• Cost of field service ministry materials such as Bibles & Bible study material
• Expenses for office supplies required to perform your work

Items NOT to include:

• Gifts given for a personal reason
• Magazines purchased for personal enjoyment
• Any cost associated with listed property (such as cameras, software, printers, lens, cell phones, batteries, computers, etc.)

2) POSTAGE

This includes fees to the U.S. Postal service, FedEx, UPS and other delivery service providers for delivery of letters, packages and other items containing business correspondence or items.

Items to include:

• Cost to distribute newsletters to supporters
• Cost to distribute Mercy Ships DVDs, videos and books to supporters
• Freight invoices for supplies sent to the ship.

Items NOT to include:

• Cost to mail personal items.

3) GIFTS

If you give gifts to your supporters, you may be reimbursed for those gifts, but only up to $ 25 per person per year. If you and your spouse both give gifts to an individual, you are treated as one taxpayer and are limited to reimbursement for only $ 25. The $25 limit does not include incidental costs, such as having your name or your supporter's name placed on the gift, gift wrapping or other related costs, as long as such costs do not exceed $4 and do not add substantial value to the gift.

4) TRAVEL

Travel expenses incurred for the purpose of raising support, along with eligible business expenses may be reimbursed under this plan. Please see the Personal Support Raising Time policies and related forms found HERE .

Upon completion of approved travel, staff should complete an Accountable Reimbursement Expense Report, including the ARP Mileage Form B, if applicable. See the link at the beginning of this section.

A. Vehicles

Use of your personal vehicle for business purposes is reimbursed using the business or moving mileage rate, as appropriate, established by the IRS. These rates change periodically and the current rates can be found at www.irs.gov

Rental vehicles are reimbursed at the actual rental cost plus applicable fuel, insurance and fees times the percent business use.

All requests for vehicle reimbursement must be accompanied by the "Mileage Log" to document the total number of miles driven and the number of business miles driven. Staff should review their proposed expenditures with FinACE representatives and follow the Personal Support Raising Guidelines.

CAUTION: Do not include any personal mileage on your reimbursement request. If you rent a vehicle for combined business and personal use, you must pro-rate the expenses that you incur based on the number of miles driven for business and the number of miles driven for personal use.

Items to include:

• Unreimbursed miles traveled to a speaking engagement, fund-raising or other business events.
• Unreimbursed mileage for travel performed for ministry, such as field services, mileage for banking, mileage incurred to obtain supplies.
• Unreimbursed mileage to attend training for ministry, such as IMS and Gateway.

Items not to include:

• Mileage to social events
• Commuting mileage (Expenses that are incurred as a result of the taxpayer's regular means of getting back and forth to his or her place of employment.

B. Travel away from tax home

Reimbursable expenses include expenditures that meet the following criteria:

0. The expenses are not lavish or extravagant under the circumstances.
0. The expense is incurred while away from home (the business trip must require an overnight stay or long enough that you need to stop for sleep or rest to properly perform your duties.)
0. The expense must be an "ordinary and necessary" business expense incurred in the pursuit of a trade or business.

Keep in mind:

• Lodging - IRC § 162(a) allows the reimbursement of lodging expenses. Lodging expenses are defined to include the cost of a room, related taxes and tips. Lodging does not include in-room movies.
• Meals while traveling - IRC § 162(a) allows the reimbursement of meals. Meals include the cost of room service or a prepared meal, related taxes and tips. Meals can also include the cost of food purchased and prepared by the employee or snacks purchased in lieu of a complete meal.
• Transportation - Transportation costs can also include the cost of transportation by air, rail, bus, taxi, etc.
• Vehicles - This includes the cost of rental vehicles and related insurance, fuel and other normal maintenance costs. Mileage logs shall be maintained to document the business use percentage. (See Vehicles above).

Criteria for a "Business Day"

A day on a business trip can be counted as a "business day" if it meets any of the following requirements:

1. Count as a business day any day that your presence is required at a particular place for a specific business purpose, even if you spend most of the day on non-business activities.

2. If your principal activity during working hours is in pursuit of your trade or business, the day is counted as a business day. In an 8 hour work day, the day needs to be primarily business related. You need to spend over half the day on business related matters.

Example: You are a doctor on the Africa Mercy and a member of a professional association. The ssociation sponsored a two-week trip to two foreign countries with three professional seminars in each country. Each seminar was 2 hours long and was held in a different city. You also made an optional side trip to a well-known tourist attraction in each of the countries visited. At the end of the trip, you received a Certificate of Continuing Education in Medicine. The entire cost of the trip is a nondeductible personal expense. You may, however, deduct your registration fees and any other expenses incurred that were directly related to your business.

3. Count as a business day any day you are prevented from working because of circumstances beyond your control, such as illness, accident, or cancellation by an unrelated party.

4. Weekends, holidays, and other necessary standby days are counted as business days if they fall between business days.

Example: You travel from Togo to Sierra Leone where you have a business appointment on Friday. You have another appointment on the following Monday. Because you had a business activity on Friday and had another business activity on Monday, the days in between are counted as business days. This is true even though you use that time for sightseeing, personal visiting, or other nonbusiness activity.

5. If weekends or holidays follow your business meetings or activity and you remain at your business destination, your non-business or personal time is not counted as a business day.

Example: You travel from Togo to Sierra Leone for a Friday business meeting, but stayed until Monday before starting home, Saturday and Sunday would be nonbusiness days.

Additionally, travel days are generally considered business days, as long as the travel occurs by the most direct route. Additional travel days incurred for side trips or nonbusiness activities cannot be counted as business days.

BUSINESS TRAVEL WITHIN THE US

Within the U.S. includes travel during which no arrivals or departures occur outside the U.S. If your trip was entirely business-related, you can deduct all your travel expenses. If you combined your trip with a vacation, made a personal side-trip, or had some other personal activity, you will need to separate your business and personal expenses. You can be reimbursed for your costs in getting to and from your business destination, and your business expenses while you were at the business location, if the purpose of the trip is primarily for business.

There is no definitive definition of what constitutes "primarily for business". Most experts believe that the IRS will count the number of days that are personal and the number of business days. If the number of business days exceed the number of personal days, then the trip is "primarily for business". For each business day, there must be written documentation of substantial business activity. If the trip consists of both personal and business, but it meets the "primarily for business" test, the cost attributed to the business days is reimbursable. The costs for the personal days are not reimbursable.

CAUTION: It is imperative that the staff maintain adequate records regarding business activities on the days counted as business days! Mercy Ships reserves the right to request such documentation and if the documentation is not provided, Mercy Ships reserves the right to count the day as a personal day.

Example 1: You fly to New York on Monday to raise support. You meet with supporters on Tuesday and Wednesday. You decide to stay over an additional day to visit your aunt. The airfare costs $ 675.00. Your food and lodging for Monday, Tuesday and Wednesday cost $ 325. Lodging and food for Thursday cost $125. The full airfare is reimbursable ($ 675) plus the food and lodging for Monday, Tuesday and Wednesday ($ 325) is reimbursable. However, the food and lodging for Thursday ($ 125) is not reimbursable.

Example 2: You live and work in Lindale and take a trip to Atlanta to raise support. On your way home, you stop in New Orleans to visit your parents. You spend $1,920 for the 9 days you are away from home for travel, meals, lodging, and other travel expenses. If you had not stopped in New Orleans, you would have been gone only 6 days, and your total cost would have been $1,620. You can deduct $1,620 for your trip, including the cost of round-trip transportation to and from Atlanta.

On the other hand, (using the data in Example 1) if a trip is primarily for personal purposes, but you had business expenses while at your destination, you can deduct the business expenses ($ 325), but not the cost of the airfare ($ 675).

BUSINESS TRAVEL OUTSIDE THE US

Travel outside the U.S. includes travel in which a departure or arrival occurs outside the U.S. If you travel outside the U.S., your reimbursable expenses will depend on whether the trip was entirely for business. If it was, and you spent all your time in business activities, you can deduct all your travel expenses. Even if there were certain personal elements involved in your trip, it may still be considered to have been entirely for business if:

• You did not have substantial control over arranging the trip
• The trip was less than a week, including business and non-business activities
• You spent less than 25% of the time in non-business activities
• Vacation was not a major consideration on the trip.

If you qualify for one of these exceptions, you do not have to allocate your travel expenses between business and personal purposes. You can deduct the total cost of getting to and from your destination. If you do not qualify for an exception and your trip includes both business and personal elements, you will need to allocate your travel expenses.

To figure the reimbursable amount of your round-trip travel expenses, use the following fraction. The numerator (top number) is the total number of business days. The denominator (bottom number) is the total number of travel days. The days you depart and return are counted as travel/business days for the trip. This fraction is then multiplied times the total cost for the airfare. Additionally, staff can be reimbursed for expenses for food, lodging and other qualified expenses incurred during the business days.

Example: On May 4, you left the ship for a trip home to raise support. You flew from Togo to Madrid and decided to spend 3 days sightseeing before returning to the States. You then proceed home to Tyler and spend 2 weeks working to raise support by meeting with churches, donors and prospective donors. You then fly directly back to Togo to the Africa Mercy. You were gone for a total of 17 days. If you had not stopped to vacation in Madrid, you would only have been gone for 14 days. Your roundtrip airfare was $1800.00.

If you had not stopped in Madrid, all of your expenses would be reimbursable. None of the expenses you incurred in Madrid can be reimbursed. However, you can obtain reimbursement for your food, travel, lodging and related expenses incurred in Texas while engaged in support raising.

You figure the reimbursable part of your air travel expenses by subtracting 0.18 of the round trip airfare. Therefore, you cannot be reimbursed for $324.18.

3 #personal days)

17 (#total days away from your home base (Africa Mercy) = 0.18

0.18 x $1800.00 = $324.00 - $1800.00 = $1475.82

ALLOCATION OF "BUSINESS" VS. "PERSONAL" DAYS OUTSIDE THE US

If your trip is primarily for business, but also includes personal elements, you must allocate your travel time on a day-to-day basis, between business days and personal days. You can deduct the business portion of the trip to and from your business destination, based on the percentage of business days outside the U.S. in relation to the total number of days of travel outside the U.S. The days you depart from and return to the United States are counted as travel days outside the U.S. Determine the non-business portion of that expense by multiplying it by a fraction. The numerator of the fraction is the number of non-business days during your travel outside the United States and the denominator is the total number of days you spend outside the United States.

SUMMARY OE RECORDS REQUIRED FOR REIMBURSEMENT 

If you have expenses for travel, entertainment, gifts or transportation, THEN you must keep records that show details of the following elements . . .

You must be able to document the elements listed across the top portion of the preceding chart. You document them by having the information and receipts or invoices for the expense. `You cannot be reimbursed for amounts that you approximate or estimate. All amounts claimed, should be supported by invoices, receipts or other documentation to support the amount claimed.

You should keep adequate records to prove your expenses. You must generally prepare a written record for it to be considered adequate. This is because the IRS considers written evidence to be more reliable than oral statements. An adequate record will include, but not be limited to, an account book, diary, statement of expense, or similar record. You should also keep documentary evidence that, together with your record, will support each element of an expense. Documentation of the above must be maintained in a "timely kept record".

5) CREW FEES

Crew fees are to cover the cost of food and lodging. The Internal Revenue Code considers the ship to be the tax home of all long term crew members, therefore crew fees would not be reimbursable under this policy.

6) ENTERTAINMENT EXPENSES

To qualify for reimbursement under this Policy, any entertainment expense must be an "ordinary" and necessary" business expense and must meet either the "directly-related test" or the "associated test".

The directly -related test requires the expense to meet the following tests:

0. The main purpose of the combined business and entertainment was the active conduct of business.
0. You actually did engage in business with the person during the entertainment period, AND
0. You had more than a general expectation of getting income or some other specific business benefit at some future time.

The "associated test" requires that you document that the entertainment is:

0. Associated with the active conduct of your trade or business, AND
0. Directly before or after a substantial business discussion.

Generally an expense is associated with the active conduct of your business if you can show that you had a clear business purpose for having the expense. A substantial business discussion requires that you show that you actively engage in the discussion, meeting, negotiation, or other business transaction to get income or some other specific business benefit.

Example: You invite friends for dinner and show a Mercy Ships video. You discuss Mercy Ships, its ission and its needs. The expense would be deductible.

Entertainment includes any activity generally considered to provide entertainment, amusement or recreation. This definition also includes providing meals, where the meal is a part of other entertainment or by itself. A meal expense includes the cost of food, beverages, taxes and tips for the meal. To be eligible for reimbursement, you must be present when the food or beverages are provided. This Policy does not provide reimbursement for lavish or extravagant entertainment expenses. Additionally, consistent with other Mercy Ship's Policies, alcoholic beverages are generally not reimbursable.

Note: To qualify for reimbursement, you must submit a receipt showing the details of the items purchased (not the summary credit card receipt) and on the ARP Expense Report document the names and business relationships of the persons entertained, the date, the place that the entertainment occurred and a summary of the business discussed during or immediately before or after the entertainment.

7) MISCELLANEOUS EXPENSES

All other expenses that would qualify as a business deduction on the individual's income tax return.

Items to include:

• Legal fees directly related to obtaining your visa.
• Cost of any special clothing items required for duty or field service.
• Expenses incurred to attend IMS and Gateway
• Continuing or professional education required by your profession.
• Cost of magazines and journals for your profession.

Items not to include:

• Educational expenses leading to a new trade or profession
• Cost of magazines and books purchased for personal enjoyment
• Per diem rates (Only actual expenses are allowed for reimbursement)

8) MOVING EXPENSES

Mercy Ships may agree to reimburse moving expenses. Such reimbursement will require a fully executed written agreement under ARP. The requirements for reimbursement are as follows:

Staff and Crew may qualify for reimbursement of moving expenses that would be deductible on the staff's individual income tax return, if not reimbursed under this Plan. Generally, these expenses must meet the following tests:

• Start of work - The move is closely related to the start of work. (See below)
• Distance - The new job location is at least 50 miles further from your former home than your old job location. (See below)
• Time - You must work full time for 39 weeks during the first 12 months. (see below)

Your move must be closely related, both in time and in place, to the start of work at your new job location.

Closely related in time. You can generally consider moving expenses incurred within 1 year from the date you first reported to work at the new location as closely related in time to the start of work. It is not necessary that you arrange to work before moving to a new location, as long as you actually go to work in that location. If you do not move within 1 year of the date you begin work, you ordinarily cannot get reimbursed for the expenses unless you can show that circumstances existed that prevented the move within that time.

Example: Your family moved more than a year after you started work at the IOC. You delayed the move for 18 months to allow your child to complete high school. You can deduct your moving expenses.

Closely related in place. You can generally consider your move closely related in place to the start of work if the distance from your new home to the new job location is not more than the distance from your former home to the new job location. If your move does not meet this requirement, you may still be able to be reimbursed for your moving expenses if you can show that:

• You are required to live at your new home as a condition of your employment; or
• You will spend less time or money commuting from your new home to your new job location.

Distance Test. Your move will meet the distance test if your new main job location is at least 50 miles farther from your former home than your old main job location was from your former home. For example, if your old main job location was 3 miles from your former home, your new main job location must be at least 53 miles from that former home.

The distance between a job location and your home is the shortest of the more commonly traveled routes between them. The distance test considers only the location of your former home. It does not take into account the location of your new home.

Example: You moved to a new home less than 50 miles from your former home because you changed main job locations. Your old main job location was 3 miles from your former home. Your new main job location is 60 miles from that home. Because your new main job location is 57 miles farther from your former home than the distance from your former home to your old main job location, you meet the distance test.

If you go to work full time for the first time, your place of work must be at least 50 miles from your former home to meet the distance test. If you go back to full-time work after a substantial period of part-time work or unemployment, your place of work also must be at least 50 miles from your former home.

If you deduct moving expenses but do not meet the time test in the current or following year, you must either:

• Report your moving expense deduction as other income on your Form 1040 for the year you cannot meet the test; or
• Use Form 1040X to amend your tax return for the year that you received the reimbursement, figuring your taxable income to include the moving expense reimbursement.

Items to include:

• Costs to pack, crate and transport household goods and personal effects
• Storage expenses incurred within any period of 30 consecutive days after the day you move.
• Travel, transportation and lodging while moving from your former home to your new home.

Items NOT to include:

• Meals during the move
• Side trips for sightseeing

The above list is not a complete list of items to include and items not to include. If you have a question, please consult staff in the FinACE department.

Additional Information

SPOUSE EXPENSES

Spouses are encouraged to accompany staff on fund raising trips, field services and other activities. Under IRS regulations, travel and entertainment expenses incurred for spousal travel will be considered a "working condition fringe" (and thus non-taxable), as long as the spouse's presence on the trip is for a legitimate business purpose. Staff should maintain adequate records to document the purpose for the spouse's attendance and the activities performed by the spouse.

PROCEDURES FOR CLAIMING REIMBURSEMENT

Upon joining Mercy Ships (MS), a Deputized Fund Raiser (DFR) shall meet with a representative of FinACE and negotiate an Agreement of Funding for their Accountable Reimbursement Plan (ARP). The Agreement of Funding shall then be forwarded to the Human Resource Department for review and approval, as a part of the DFR's overall compensation package. Upon the approval and signature by the DFR, FinACE and Human Resource representatives, the Agreement shall become effective.

After the Agreement becomes effective, it cannot be changed until the earlier of the staff member's first review , January 1 or July 1. The Agreement of Funding shall reflect the amount, if any, that Mercy Ships agrees to temporarily restrict to reimburse the DFR for the expenses that the DFR incurs in their capacity as a DFR. Amounts temporarily restricted for DFRs may be recorded in a separate account in the name of the DFR. However, Mercy Ships shall retain ownership of the funds and any funds left in the ARP Account 18 months after the DFR leaves Mercy Ships shall revert to the General Funds of Mercy Ships. Should the DFR initiate an application to return to service within 18 months of their departure, the funds will remain available for their reimbursable expenses.

Reimbursements will only be paid to the extent of the balance in their ARP account. Any excess of reimbursement request, over the available ARP account balance, may be carried over and paid from future funds restricted to reimburse the staff member.

SUBMISSION OF EXPENSE REPORT

All Deputized Fund Raisers ( DFRs) shall submit on a timely basis an Accountable Reimbursement Expense Report (hereinafter referred to as the "ARP Expense Report") in the form requested by Mercy Ships. The ARP Expense Report shall be submitted to the local FinACE representative. The report must be complete in all respects - have receipts attached for all expenditures (see below), contain the submitters signature, have complete explanation of the business purpose for the expenditure and contain such other information required to insure compliance with applicable IRS requirements for an Accountable Reimbursement Plan.

After review and approval by the FinACE representative, the reviewer shall sign the expense report documenting their review of the request - for compliance with this Policy - and approval of the expenses. The expense report shall then be forwarded to the Finance Department. Upon receipt by the Finance Department of a complete expense report, the Finance Department shall make a disbursement to the submitter either by an account payable check, by inclusion in the individual's next payroll check or by direct credit to the individual's crew bank account.

If the amount temporarily restricted in the ARP account is not sufficient to pay the entire costs submitted, then the excess costs may be paid from future amounts temporarily restricted.

CAUTION: Nothing in this Policy should be construed as tax advice. Please consult your tax advisor if you have questions regarding any tax issues.

CAUTION:  DFRs may encounter situations in certain countries, where receipts are not issued as a part of the standard business practice. This is problematic, but may be over come by maintaining contemporaneous records showing the date, time, place, amount, nature of the transaction and names of other individuals present when the transaction occurred. Mercy Ships will generally honor these records in lieu of a receipt for transactions in these countries ONLY. However, every attempt should be made to obtain a written receipt from the vendor. Anyone found to be abusing this system will forfeit all rights to future reimbursements.

CAUTION: When submitting claims for reimbursement, please remember that it is our (and your) responsibility to act with integrity to protect the reputation of Mercy Ships and our mission to help the forgotten poor.

CAUTION: This policy reflect current U.S. tax law as of the date of adoption. If you are incurring a significant expenditure, for which you intend to seek reimbursement, please verify, with a FinACE representative and your independent tax advisor, that there have not been any significant changes to the tax rules and regulations before entering into any transaction.

CAUTION: Most situations in which a request for reimbursement is denied can be attributed to not maintaining sufficient documentation to meet the above requirements. Adequate record keeping is required by IRS rules and Mercy Ships cannot vary from the IRS rules.

If you have further questions, please contact finACE@mercyships.org