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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 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   (To non-employees)

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

Form W-9* attached to payment documentation

Gift certificates and other cash equivalents   (To employees)

Must be reported regardless of dollar value

Names and University ID numbers attached to payment documentation

Book Store gift certificates   (To non-employees)

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.

 



updated 2/13/2012 4:34:29 PM

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