Processing Requirements for Gifts, Prizes and Awards
We have a legal obligation and are committed to following IRS regulations. Gifts to employees paid for with University funds (source of funding makes no difference) must be taxed as ordinary income to the employee. Payments from endowments are not automatically exempt; they are subject to the same rules and guidelines and may be taxed. There are some “reasonable” exceptions when a department may be able to purchase something for an employee. These exceptions would include events like an employee’s illness or a family crisis.
If you give an employee a cash equivalent gift, e.g. gift certificate or gift card or a non-cash gift worth more than $100, you will need to complete a Taxable Gift Documentation Form.
Holiday parties or annual celebrations when all employees in a unit are invited are usually exempt from the IRS regulations.
Also note, when paying for Student Services and Scholarships with departmental funds, all student scholarships must be processed through the Financial Aid System and applied to the student’s account.
Use the following guidelines when you are planning on giving something to an employee that has been purchased with University Funds:
Gifts are typically remissions of cash, gift certificates/gift cards or tangible personal property given to University employees in recognition of, or in connection with the holiday season, retirement, or some other purpose.
Prizes and awards are typically remissions of cash or tangible personal property bestowed on University employees in recognition of outstanding achievement in teaching, research, academic performance or other performance-related activities.
The information will be reported on the individual’s annual W-2 issued in January for the previous calendar year.
Yes, if appropriate. If the recipient of the item is a non-DU employee, the gift, prize, or award amount will be reported on a 1099-MISC form, provided to the recipient in January. Accounts Payable will also provide the information to the IRS. This information will only be provided if all payments to the recipient exceed $600 during the calendar year.
We anticipate that this policy will not address all circumstances. If you have additional questions about the taxability of gift, prize or award payments, call the Controller’s Office at 1x3044. If your question relates to payroll tax issues, call the Payroll Office at 1x3744.