University of Southern Indiana

Guidelines and Procedures

Accounts Payable provides guidelines for following University policies.

General Guidelines for the Purchase of Food from University Funds

The following guidelines do not apply to candidate meals or meals associated with travel. Refer to Travel Policy or Section B.25 of the University Handbook.

University funds may be used to purchase food in accordance with the University Hospitality Policy. Food provided to employees, however, is generally considered to be taxable income as defined by the Internal Revenue Service unless certain conditions are met. (Reference IRS Publication 15-B and IRS Publication 463.)

Examples of activities that are allowable without tax consequences include:

  • Official business of the Board of Trustees
  • Official University-wide functions
  • University-wide training or recognition
  • Events with the primary purpose of student recruitment, recognition, or attendance
  • Extended Services courses, where the cost of the course includes a factor for hospitality
  • Meals when employees are required to work through a normal meal hour without an opportunity to have the meal at an alternate time
  • Meetings or events with members of the community or other non-employees to conduct official University business or represent USI
  • Meetings with representatives from multiple departments if the cost per person is less than $50
  • Formal employee training, recognition, and celebrations conducted away from the place that the employees’ work is normally performed if the cost per person is less than $50
  • Meals provided to the spouse of an employee when the spouse is representing the University and his or her attendance is required or expected

Examples of activities that are allowable, but taxable include:

  • Food for the purpose of encouraging or recognizing effort or achievement of employees other than University-wide events to honor employees
  • Meetings with representatives from multiple departments if the cost per person is $50 or more
  • Formal employee training, recognition, and celebrations conducted away from the place that the employees’ work is normally performed if the cost per person is $50 or more

Examples of activities that are not allowable and will not be paid or reimbursed by the University include:

  • Alcoholic beverages*
  • Hospitality related to fund raising where the revenue is deposited into the USI Foundation*
  • Departmental staff meetings
  • Meals or entertainment expenses of elected officials or government employees who are not guests at a University-wide event
  • Office parties (birthday, retirement, etc.)

*Alternative funding sources, such as the USI Foundation, may be available for certain expenses not allowed from University funds. Departments should coordinate the payment of such expenses in advance with the Foundation.

Gifts, Prizes, Awards, and Giveaways

 

Payments to individuals for services, appreciation, recognition, prizes, and awards are considered taxable income to the recipient.  The amount of the payment will be subject to tax withholding and included on Form W-2 for employees or reported on Form 1099-MISC if the recipient is not an employee of the University.

These types of payments must only be made directly to the individual from the University (via Accounts Payable or Payroll by check or direct deposit) to ensure compliance with Internal Revenue Service requirements.  Payments made by third parties to individuals by cash or check for services, prizes, awards, gifts, or giveaways are not permitted and will not be reimbursed by the University.

Cash Equivalents

 

The IRS specifically defines gift certificates, gift cards, and any financial instruments redeemable for cash as cash equivalents and states that the value of these items is considered taxable income to the recipient regardless of dollar value.  (Reference IRS Publication 15-B and Internal Revenue Code 274 (e)(3)(B).)

 

In order for the University to comply with tax reporting regulations, it is required that a completed Form W-9 (Request for Taxpayer Identification Number and Certification) must be submitted to the Accounts Payable Department for any cash equivalent provided by the University to non-employees.  The University ID number must be provided in place of Form W-9 for employees receiving cash equivalents.

 

If a cash equivalent is distributed to an ineligible recipient or Form W-9 is not provided to the Accounts Payable Department for non-employee recipients, the purchase will be considered to be a gift from the individual, and therefore it cannot be purchased or reimbursed by the University. (Reference University Handbook item F.26.) 

 

Non-cash Awards

 

Non-cash gifts, awards, prizes, and giveaways are also considered to be taxable income and reported at their fair market value.  The requirement listed above for a completed Form W-9 for non-employees or University ID number for employees also applies to these purchases.  If the unit cost of an item is less than $50, then it will be considered de minimis and excluded from reporting. 

 

University of Southern Indiana Bookstore gift certificates are classified as non-cash awards.  They are considered tangible goods since the recipient receives a good such as University logo apparel.  The requirement listed above for a completed Form W-9 for non-employees or University ID number for employees also applies to these purchases.  For non-employees, if the certificate is less than $75, then it will be considered de minimis and excluded from reporting.  Certificates for employees or above $75 require reporting. 

 

 

This chart summarizes the University’s tax reporting requirements and information required for such purchases:

 

        

  

Payment type

  
  

Dollar limits

  
  

Information required

  

Gift certificates and other cash equivalents

 (To   non-employees)

Must be reported regardless of dollar value (excludes   Bookstore gift certificate per guideline listed above)

Form W-9* attached to payment   documentation

Gift certificates and other cash equivalents

 (To employees  &  students)

Must be reported regardless of dollar value

 

Names   and University ID numbers attached to payment documentation

USI   Bookstore gift certificate

(To non-employees)

 

Report when unit price is greater than or   equal to $75.**      

 

(Unit price = total   cost/quantity)  

 

If unit price is $74.99 or less, it will be   considered de minimis and excluded from reporting.

Form W-9* attached to payment   documentation

Non-cash   gifts, awards, prizes, giveaways, etc.

(To non-employees)

Report when unit price is greater than or   equal to $50.**      

 

(Unit price = total   cost/quantity)  

 

If unit price is $49.99 or less, it will be   considered de minimis and excluded from reporting.

Form W-9* attached to payment   documentation

Non-cash   gifts, awards, prizes, giveaways, etc.

 (To employees &      students)

Report when unit price is greater than or   equal to $50.**     

 

(Unit price = total cost/quantity)  

 

If unit price is $49.99 or less, it will be   considered de minimis and excluded from reporting.

Names and University ID numbers attached to payment documentation    if over dollar limit

 

 

Employee apparel

Must be reported regardless of dollar value

Names and University ID numbers attached to payment documentation

 

*Note: Form W-9 may only be submitted by a U.S. citizen or other U.S. person as defined by the IRS.  If an individual does not meet that criteria, then he or she should not fill out Form W-9 and must not receive any cash equivalent from the University until tax ramifications have been researched and the disbursement has been approved by the accounts payable and payroll departments. 

 

** Recipient information is not required for the purchase of plaques because they cannot be easily converted or otherwise used to benefit the individuals in a material or quantifiable way. 

 

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