The Internal Revenue Service has stated that an employer provision of cash or a cash equivalent of any denomination is never excludable as a de minimis fringe benefit from an employee’s wages.  In addition, prizes and awards may be considered taxable income to the recipient.  The College is responsible for proper reporting to the IRS for qualifying prizes and awards paid for by College funds.

Background:

The Internal Revenue Service has stated that, under certain circumstances, gifts, prizes and awards to individuals are considered taxable income. This policy has been put into effect in order to ensure the College’s compliance with these Internal Revenue Service requirements.

EFFECTIVE 12/01/12: GIFT CARDS MAY NOT BE PURCHASED USING A COLLEGE PROCUREMENT CARD.  Purchases of gift cards or cash equivilant items are considered to be a cash advance to the person acquiring them.  All such items must be properly reported on the Gift Giving & Prizes Reporting Form; missing information will delay reimbursement.  Unaccounted for cards will be considered a taxable fringe and reportable on the purchaser’s payroll. This also applies to reporting of tangible goods in excess of $100 in value.

When tickets must be purchased to participate in a raffle or drawing, please see the policy Raffles and Drawings on the Payroll site.

Policy Guidelines

Gifts, Prizes and Awards for College Employees

Employer provision of cash or a cash equivalent of any denomination is never excludable as a de minimis fringe benefit from an employee’s wages.  This applies to staff, faculty, and student workers for gifts or prizes received by virtue of employment*. Therefore, all gift cards/certificates, debit cards or other cash equivalent items given in appreciation or as a prize won through College surveys or raffles, are taxable income to College employees.  Gifts of tangible personal property over $100 are also taxable.

 *The policy described above applies to student workers only as it relates directly to their employment by the College, such as student appreciation gifts or awards.

How to Report:

The Gift Giving & Prizes Reporting Form is to be completed for all gift cards/certificates, debit cards or any other cash equivalent items of any amount, as well as tangible goods in excess of $100 value, and submitted with requests for reimbursement or the Purchasing Card (P-Card) statement.  P-Card purchases are restricted to tangible goods only. The Payroll Office will report taxable items as a fringe benefit to the recipient. 

See the section further in the policy for possible exclusions to Employee Achievement Awards.  Note: Cash or it's equivilant is never excluded from reporting.                          

Prizes or Awards--Activities Sponsored for Students: 

Prizes or awards won by the student population through College activities are also considered taxable, and subject to reporting when applicable.  There must therefore be a record of all gift cards/certificates, debit cards or any other cash equivilant items of any amount, as well as tangible goods in excess of $100 in value.

How to Report:

The Gift Giving & Prizes Reporting Form is to be completed for all gift cards/certificates,  debit cards or any other cash equivalent items of any amount, and tangible goods in excess of $100.  Prizes are considered taxable, and may be reported on Form 1099.

NOTE: In the case where a cash prize is offered as part of a survey (for example), distribution of that prize must be processed through the Business Office.  A Check Request is to be submitted to Accounts Payable, with substantiating documentation attached.

Gifts, Prizes and Awards for Outside Recipients

Prizes won through College activities (any events where prizes are raffled or awarded), are considered taxable and subject to reporting when applicable.  There must therefore be a record of all gift cards/certificates, debit cards or any other cash equivalent items of any amount, as well as tangible goods in excess of $100 in value.  
NOTE:  Gift cards are NOT to be given in lieu of compensation when a service is performed gratuitously to the College.

How to Report:

The Gift Giving & Prizes Reporting Form is to be completed for all gift cards/certificates, debit cards or cash equivalent items of any amount, as well as tangible goods in excess of $100 value, and submitted with requests for reimbursement or the Purchasing Card (P-Card) statement.  P-Card purchases are restricted to tangible goods only. Prizes are considered taxable, and may be reported on Form 1099.

NOTE: In the case of a cash prize, distribution of that prize must be processed through the Business Office.  A Check Request is to be submitted to Accounts Payable, with substantiating documentation and a W-9 attached.

Possible Exclusions for Employee Achievement Awards

Achievement awards of tangible personal property up to $400 might be excluded from taxable income of the recipient, under certain conditions. The exclusion does not apply to cash, cash equivalent, or other intangible property (such as lodging, meals, tickets to theater or sporting events. All the following must be met to qualify for the exclusion:

1)  It must be given to an employee for length of service (which is a minimum of five years employment with no other such award in same year or prior four years).

2)  It is awarded as part of a meaningful presentation.

3)  It is awarded under conditions that do not create a likelihood of disguised pay.  

NOTE: A traditional retirement gift is an exception to the five-year rule Reg. §1.274-8(d)(2)

How to Report:

The Gift Giving & Prizes Reporting Form, along with documentation describing how and why the award was presented, must be completed in order to support fulfillment of the criteria for the exclusion. This is to accompany the request for reimbursement or the Purchasing Card month end statement.

Examples of Taxable/Not Taxable Items:

GIFT/PRIZE/AWARD

TYPE

NON TAXABLE VS TAXABLE

Gift Card to Starbucks 

Cash Equivalent      

Taxable

Gift Certificate to Spa 

Cash Equivalent      

Taxable

IPOD worth $550 

Tangible Property

Taxable

Book/Frame under $100

Tangible Property

Non-Taxable

 Updated October 23, 2013

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Saint Mary's College of California
1928 Saint Mary's Road
Moraga, CA 94575
(925) 631-4000
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