The Travel and Transportation Reform Act of 1998 (Public Law 105-264) mandates Federal Government account holders to use the contractor-issued travel account for official government travel expenses and to receive cash advances unless:
- A vendor does not accept the travel account;
- The Administrator of GSA has granted an exemption (see FTR Section 301-70.704); or
- Your agency head or his/her designee has granted an exemption.
Government travel accounts are VISA or MasterCard branded and can be used at any location that accepts VISA or MasterCard, including internationally. The GSA SmartPay travel account may be used only for authorized official travel and authorized travel related expenses. Official travel expenses are transportation, lodging, meals, and incidentals. The travel account may NOT be used for personal expenses or used by any other person.
Why does the U.S. Government have a travel payment solutions program?
The Travel and Transportation Reform Act of 1998 (Public Law 105-264) mandates Federal Government account holders to use the travel account for official government travel expenses. The travel account allows individual account holders to pay for travel expenses and receive cash advances. In many instances, use of the account has eliminated the need for agencies to issue travel cash advances. Government account usage provides streamlined, best-practice processes that are consistent with private industry standards.
The GSA SmartPay Program has continued to grow through increased adoption as agencies/organizations realize benefits afforded under the program.
- Universal Acceptance: Because GSA SmartPay travel accounts are either VISA or MasterCard brands, they can be used at any merchant that already accepts these types of payment.
- Safety and Convenience: GSA SmartPay travel accounts significantly reduce or eliminate the need for agency imprest funds or cash. Account holders do not need to worry about carrying large amounts of cash with them when they travel, thus making the GSA SmartPay payment solutions more secure as well as more convenient for the traveler.
- Refunds: Agencies receive monetary payments provided by the contractor based on the dollar or spend volume during a specified time period, which result in millions of dollars back per year for the agency.
- Electronic Access to Data: The GSA SmartPay contractor banks all provide an Electronic Access Systems (EAS), which provides account access and a variety of reports to assist in the effective management of the program.
What types of travel accounts are there in the GSA SmartPay program?
There are three types of travel accounts: Centrally Billed (CBA), Individually Billed (IBA), and Tax Advantage Accounts. These accounts are often identified by their physical appearance as well as account numbers.
If the 6th digit of the card = 1, 2, 3, 4, the card is a GSA Smartpay IBA
Travel Individually Billed Accounts (IBAs) are issued directly to the employees of the customer agency/ organization to be used to pay for official travel and travel-related expenses. IBAs may only be issued to federal employees or employees of Tribes or Tribal Organizations. IBAs may be used for local travel only if authorized by written policy of the agency/ organization. Agencies/ organizations reimburse employees only for authorized and allowable expenses. Account holders are directly responsible for all purchases charged to the IBA account. Payment may be made directly by the account holder, agency/ organization, or in the form of a split disbursement in accordance with agency/ organization policy.
If the 6th digit of the card = 0, 6, 7, 8, 9, the card is a GSA Smartpay CBA
Travel Centrally Billed Accounts (CBAs) are established by agencies/organizations for official travel charges and official travel-related expenses. Agencies/organizations generally use the Travel CBA to purchase common carrier transportation tickets for employee official travel through third-party arrangements, such as the GSA E-Gov Travel Service (ETS) for civilian agencies, the Defense Travel System (DTS) for the Department of Defense or permissible equivalent travel system. Agencies/organizations may also make purchases through travel management centers, commercial travel offices, and through other government contracts.
If the 6th digit of the card = 5, the card is a GSA Smartpay Tax Advantage Account
GSA SmartPay Tax Advantage Travel Card Accounts are new product offerings that combine an Individually Billed Account (IBA) and Centrally Billed Account (CBA), providing a means to obtain tax exemption automatically at the point of sale for rental cars and lodging charges. Agencies / Organizations not eligible to receive IBAs may not utilize Tax Advantage Travel Card Accounts. The combined features of CBAs and IBAs are a key characteristic of this product.
When using the Tax Advantage Travel Card Account, charges for rental cars and lodging will be automatically billed to a CBA for payment, taking advantage of the Government’s tax exemption status for those types of accounts. Charges for other travel-related purchases such as meals and incidentals are billed to the IBA portion of the account, will still incur tax, and the individual traveler will still be liable for payment to the bank for those charges.
How does the GSA SmartPay Tax Advantage Travel Card Account Work?
The Tax Advantage Travel Card Account is issued to an employee designated by the agency/organization in the employee’s name. Agency/Organization Program Coordinators (A/OPCs) will work with their GSA SmartPay 3 Contractor to identify Merchant Category Codes (MCCs) for rental cars and lodging to be excluded from taxes. Accounts will be established using IBA procedures, to include credit checks or other creditworthiness assessments. When the card is used, invoices will be sent to the employee and the agency/organization for payment via split disbursement. The CBA portion of the charges will be paid by the agency and the IBA portion of the charges will be the responsibility of the employee. Agencies/Organizations must specify invoice elements in their task order level requirements.
Who is liable for charges?
- IBA Accounts: The GSA SmartPay Master Contract stipulates that liability for all charges rests with the individual account holder. If the account holder fails to pay his/her account on a timely basis, the bank may suspend or cancel the account and assess late charges and fees. If the bank cancels an account due to delinquency, the bank may report that information to credit bureaus and the information will appear on the account holder’s personal credit report. Also, the bank can pursue debt collection to obtain repayment of the charges. The agency/organization is never responsible or legally liable for the account.
- CBA Accounts: The Federal Government accepts liability only for those proper charges made by an authorized centrally billed account holder using the account, but is not liable for any unauthorized use. Unauthorized use means the use of an account by a person, other than the account holder, who does not have actual, implied or apparent authority for such use and from which the account holder receives no benefit. When the centrally billed account has been used by an authorized account holder to make an unauthorized purchase, the Government is liable for the charge and the agency is responsible for taking appropriate action against the account holder.
- Tax Advantage: Because the Tax Advantage Travel Account is a combination of both IBA and CBA, the liability will be determined by the type of purchase. If the purchase is an IBA, then the liability falls on the account holder (see IBA accounts). If the purchase is a CBA, then the liability falls on the Government (see CBA accounts).
Tax Advantage Travel Card Account
The Tax Advantage Travel Card Account allows travelers to receive state sales tax exemption for hotels and car rentals. Learn more about this new payment solution by watching the short video below.
What is the appropriate use of the GSA SmartPay travel account?
The GSA SmartPay Travel Accounts may be used ONLY for authorized official travel and travel-related expenses. Official travel expenses are broadly categorized as transportation, lodging, meals and incidentals.
The travel account must not be used for personal expenses unrelated to official Government travel. This is considered to be misuse of the account, or use of a Federal payment solution by an authorized user for other than the official government purpose(s) for which it is intended.
To help prevent misuse, the travel account may be electronically coded to be rejected at merchant locations that your agency has determined are not necessary for conducting official Government business.
Some Agencies Allow the GSA SmartPay Account to be used for local travel.