Gifts, Awards, Prizes
Revised: July 1, 2010
Also refer to Signature Authority Policy
Table of Contents
Gifts, Awards, Prizes Policy
IRS Regulations
De Minimis Fringe Benefit Defined
Achievement Award Defined
Traditional Retirement Gift Defined
Business Gifts Defined
Personal Gifts Defined
Cash Gift Defined
Non-Cash Gifts Defined
Nominal Value Defined
Gift Certificates/Gift Cards
Taxation on Non-Cash Length-of-Service Awards
Taxation on Non-Cash Safety Achievement Awards
Taxation on Non-Cash Retirement Gifts
Additional Information
Gift, awards, prizes policy
The University follows IRS regulations with regards to the giving of business gifts, awards and prizes. Personal gifts, awards and prizes are not permitted.
IRS regulations
Section 74 of the Internal Revenue Code (IRC) provides that cash gifts, prizes and awards are included in gross income of the recipient. Therefore, the University includes all cash gifts, prizes, or awards given to University employees in gross wages subject to FICA and federal and state income taxes. Non-cash gifts, prizes and awards given to employees are subject to taxation unless they qualify as one of the of the following:
- a 'de minimis' fringe benefit (see below),
- achievement award (see below), or
- a traditional retirement gift, (see below)
Note: For purposes of determining thresholds for taxability as discussed below, the University aggregates the value of all non-cash gifts, prizes and awards given to an individual employee in a calendar year. All cash gifts, prizes and awards are subject to tax regardless of the amount.
De minimis fringe benefit defined
A de minimis fringe benefit is one considered so small that accounting for it would be unreasonable or administratively impracticable. Examples of 'de minimis' items include occasional tickets to theater or sporting events and gifts that express sympathy for recent death or major illness of an employee or an employee's family member, etc.
Achievement award defined
An achievement award is an item of tangible personal property, not cash (see definition below), that is:
- transferred by the University to an employee for length-of-service achievement or safety achievement,
- awarded as part of a meaningful presentation, and
- awarded under conditions and circumstances that do not create a likelihood of the making of a payment that comprises disguised compensation.
Traditional retirement gift defined
A traditional retirement gift is an item of tangible personal property, not cash (see definition below), given to an employee upon his/her retirement in the University's normal course of business. Examples include, but are not limited to, plaques, University-logo items, etc.
Business gifts defined
A gift given in the course of University business. These include, but are not limited to:
- sympathy expressions (death or illness),
- appreciation to past donors,
- achievement awards,
- retirement gifts, and/or
- gifts of nominal value to promote goodwill (i.e. employee morale, recognition for volunteer/philanthropic activities, student project awards, etc.) or for promotional purposes
Personal gifts defined
The University considers the following to be personal gifts that will not be paid or reimbursed with University funds:
- birthday gifts (including cakes),
- holiday gifts,
- wedding gifts, and/or
- baby gifts
Cash gift defined
Cash, checks or negotiable items readily convertible to cash (i.e., traveler's checks).
Non-cash gifts defined
Examples include, but are not limited to, gift baskets, flowers, occasional tickets to theatre or sporting events, etc.
Nominal value defined
The University considers nominal value to be both
- occasional and
- $100 or less
Note: Gifts, awards, and prizes greater than $100 will be reported to the IRS on Form W-2 or Form 1099 as appropriate.
Gift Certificates/Gift Cards
Gifts certificates and gift cards are considered cash gifts by the IRS, and, as such, are always subject to taxation regardless of dollar value, and therefore use is not allowed due to the IRS and State tax reporting burden to the University, faculty, staff, students, and others. Please contact the Controller's Office for further information if needed.
Taxation on non-cash length-of-service awards
IRC §274 provides that length-of-service awards are non-taxable if (all four conditions must be met):
- The employee has at least five years service.
- The employee has not received a length-of-service award within the last five years.
- The awards are presented as part of a meaningful ceremony and should not be determined based upon an employee's classification.
- The cost of award is less than $400.
Taxation on non-cash safety achievement awards
IRC §274 states that safety achievement awards that recognize an employee's accomplishments for maintaining or promoting defined safety standards are non-taxable if:
- The award is limited annually to less than 20% of the University's total employees,
- The award is not presented to managers, administrators, clerical, and professional employees, and
- The award is limited to $400 per employee per year.
Taxation on non-cash retirement gifts
Retirement gifts of ≤ $400 are excluded from taxation regardless of the length of service. Gifts > $400 will be reported as taxable wages and taxed accordingly.
Additional information
Contact the Payroll Department for additional information.