Background:

The Internal Revenue Service has stated that, under certain circumstances, gifts, prizes and awards to individuals are considered taxable income.  The College is responsible to appropriately report such items that are paid for with College funds.  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 are considered to be a cash advance to the person acquiring them.  Recipients of all of the gift cards must be properly reported; 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.

Gift Giving & Prize Reporting Form
Find the Gift Giving & Prizes Reporting Form on the Accounts Payable Forms page »

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 gift cards/certificates, debit cards or any other cash equivalent items regardless of 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.                               

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 regardless of amount, as well astangible 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 regardless of 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 regardless of 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 regardless of 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.

 IN NO CASE SHOULD A PRIZE (CASH OR EQUIVILANT/TANGIBLE GOOD IN EXCESS OF $100 VALUE) BE RELEASED WITHOUT RECEIPT OF A W-9.

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 December 1, 2012