Taxable Transactions

The following is from Financial Operations regarding the treatment of gifts and awards to University employees:

Gift Cards, certificates, cash, checks and direct deposits are always taxable income to an employee under IRS guidelines.  The Internal Revenue Code (IRC) section 132(a) states that "de minimus fringe benefits" are considered non-taxable, except when they are in the form of gift cards, certificates or coupons.

Generally, the IRS considers all employee gifts and awards to be taxable income.  However, the IRS does provide exception for "de minimus fringe benefits".  Their practices have shown the following:

     A.  The gift/award must be of "small value and frequency"
     B.  Anything above $50.00 is to be considered taxable to the employee

Some common "de minimus fringe benefits" include occasional department parties or picnics;  occasional dinner money due to overtime work; occasional tickets (not seasonal tickets) to the theater or sporting events, coffee, donuts and soft drinks; group meals; flowers, fruit, books, turkeys and hams or similar property provided under special circumstances such as illness, outstanding performance, or family crisis provided that the requirements of the IRS rules are met.

Distribution of any cash benefit, regardless of the dollar value, is never excludable.  Gift cards, certificates and coupons are considered by the IRS to be a cash equivalent.

Because of the difficulty of tracking taxable wages from gift cards, effective immediately, the purchase of gift cards and certificates for ACU employees is no longer allowable.  If a gift card or certificate is purchased for an employee, the department who purchased the card needs to alert payroll of the purchase.  The value of the gift card or certificate will then be added as taxable wages to the recipients W/2.