N.D. Admin. Code 75-03-20-08

Current through Supplement No. 395, January, 2025

Section 75-03-20-08 - Nonallowable costs

Nonallowable costs include, but are not limited to:

1. Promotional, publicity, and advertising expenses, exclusive of personnel procurement;

2. Political contributions;

3. Salaries or expenses of a lobbyist;

4. Basic research;

5. Fines or penalties including interest charges on the penalty, bank overdraft charges, and late payment charges;

6. Bad debts;

7. Compensation and expenses for officers, directors, or stockholders;

8. Contributions or charitable donations;

9. Costs incurred for activities directly related to influencing employees with respect to unionization;

10. Costs of membership or participation in health, fraternal, or social organizations such as eagles, country clubs, knights of columbus;

11. Corporate costs such as organization costs, reorganization costs, costs associated with acquisition of capital stock, costs relating to the issuance and sale of capital stock or other securities, and other costs not related to client services;

12. Home office costs which would be unallowable if incurred directly by the center;

13. Stockholder servicing costs incurred primarily for the benefit of stockholders or other investors. Such costs include, but are not limited to, annual meetings, annual reports and newsletters, accounting and legal fees for consolidating statements, stock transfer agent fees, and stockbroker and investment analysis;

14. The cost of any equipment, whether owned or leased, not exclusively used by the center except to the extent that the center demonstrates to the satisfaction of the department that any particular use of equipment was related to client care;

15. Costs, including by way of illustration and not by way of limitation, for legal fees, accounting and administrative costs, travel costs, and the costs of feasibility studies, attributed to the negotiation or settlement of the sale or purchase of any capital assets, whether by sale or merger, when the cost of the asset has been previously reported and included in the rate paid to any center;

16. Depreciation expense for center assets which are not related to client care;

17. Personal expenses of owners and employees for items or activities including, but not limited to, vacations, boats, airplanes, personal travel or vehicles, and entertainment;

18. Costs which are not adequately documented. Adequate documentation includes written documentation, date of purchase, vendor name, listing of items or services purchased, cost of items purchased, account number to which the cost is posted, and a breakdown of any allocation of costs between accounts or centers;

19. The following taxes, when levied on providers:

a. Federal income and excess profit taxes, including any interest or penalties paid thereon;

b. State or local income and excess profit taxes;

c. Taxes in connection with financing, refinancing, or refunding operations such as taxes in the issuance of bonds, property transfers, issuance or transfer of stocks, etc. Generally, these costs are either amortized over the life of the securities or depreciated over the life of the asset. They are not, however, recognized as tax expense;

d. Taxes such as real estate and sales tax for which exemptions are available to the center;

e. Taxes on property which is not used in the provision of covered services; and

f. Taxes such as sales taxes, levied, collected, and remitted by the center;

20. The unvested portion of a center's accrual for sick or annual leave;

21. Expense or liabilities established through or under threat of litigation against the state of North Dakota or any of its agencies; provided, that reasonable insurance expense may not be limited by this subsection;

22. Fringe benefits, exclusive of the Federal Insurance Contributions Act, unemployment compensation, health, dental and vision insurance, life insurance, workers compensation insurance, payments toward retirement plans, accrued compensation for absences, and uniform allowances which have not received written prior approval of the department;

23. Fundraising costs including salaries, advertising, promotional, or publicity costs incurred for such a purpose;

24. Funeral and cemetery expenses;;

25. Travel not directly related to professional conferences, state or federally sponsored activities, or client services;

26. Items or services such as telephone, television, and radio which are located in a client's room and which are furnished solely for the convenience of the clients;

27. Value of donated goods and services except as provided for in subsection 5 of section 75-03-20-09;

28. Religious salaries, space, and supplies;

29. Miscellaneous expenses not related to client services;

30. Premiums for top management personnel life insurance policies, except that such premiums shall be allowed if the policy is included within a group policy provided for all employees, or if such a policy is required as a condition of a mortgage or loan and the mortgagee or lending institution is listed as the beneficiary;

31. Travel costs involving the use of vehicles not exclusively used by the center are allowable only within the limits of this subsection:

a. Vehicle travel costs may not exceed the amount established by the internal revenue service.

b. The center must support vehicle costs related to client care with sufficient documentation. Documentation includes mileage logs for all miles, purpose of travel, and receipts for purchases.

c. The center must document all costs associated with a vehicle not exclusively used by the center;

32. Vehicle and aircraft costs not directly related to center business or client services;

33. Nonclient-related operations and the associated administrative costs;

34. Costs related to income-producing activities regardless of the profitability of the activity;

35. Costs which are incurred by the center's subcontractors or by the lessor of property which the center leases, and which become an element in the subcontractor's or lessor's charge to the center, if such costs would not have been allowable had they been incurred by a center directly furnishing the subcontracted services or owning the leased property;

36. All costs for services paid directly by the department to an outside provider;

37. Depreciation on assets acquired with federal or state grants;

38. Costs that are incurred due to management inefficiency, unnecessary care or services, agreements not to compete, or activities not commonly accepted in the industry;

39. The cost of consumable food products, in excess of income from employees, guests, and nonclients offset in accordance with section 75-03-20-16.1, consumed by persons other than clients or maintenance personnel identified in subdivision c of subsection 2 of section 75-03-20-06; and

40. Payments to clients, whether in cash or in kind, for work performed or for bonuses or rewards based on behavior.

N.D. Admin Code 75-03-20-08

Effective December 1, 1991.

General Authority: NDCC 25-03.2-10, 50-06-16

Law Implemented: NDCC 25-03.2