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 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 Certificates are classified as non-cash awards.
They are considered tangible goods since the recipient recieves a good such as University logo apparel.
The requirement listed above for a completed Form W-9 for non-employess 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 minimus and be 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 |
|
Form W-9*
attached to payment documentation |
|
Gift certificates and other cash equivalents |
Must be reported regardless of dollar value |
Names and
University ID numbers attached to payment documentation |
|
Gift certificates and other cash equivalents |
Report when unit price is greater than or equal to $75.** (Unit price = total cost/quantity)
If price is $74.99 or less, it
will be considered de minimus and excluded from reporting |
Form W-9*
attached to payment documentation |
|
Non-cash gifts, awards, prizes, giveaways, etc. (Non-employees |
Report when unit price is greater than or equal to $50.** (Unit price = total cost/quantity)
If price is $49.99 or less, it
will be considered de minimus and excluded from reporting |
Form W-9*
attached to payment documentation |
|
Non-cash gifts, awards, prizes, giveaways, etc. (To 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. |
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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