SECTION 44: Issuing Gifts, Gift Cards, and Prizes
Last updated: March 2018
- Policy Introduction and Definitions
- Employees
- Students
- Volunteers and Guests
- Research Participants
- Prizes for Formal Contests/Drawings, Special Events, and Departmental (Non-Research) Surveys
- Accounting for Gift Cards
- Exhibits/Forms
I. Policy Introduction and Definitions
This policy does not apply to: MSU-sponsored Employee Awards/Service Recognition Programs (see Manual of Business Procedures (MBP hereafter) Section 55), or Student Financial Aid/Awards/Scholarships (see MBP Section 23 and Office of Financial Aid Institutional Awards Policy), or sponsorships/donations (see MBP Section 47).
Gifts and prizes include cash payments, gift cards, and non-cash gifts paid for with University funds.
Gift cards are any card with a specified dollar value, including retail cards (e.g. Meijer, Spartan Bookstore), VISA or other debit-style cards, and Spartan Cash.
Non-cash gifts include gift certificate for a specific item (e.g. a certificate or coupon for specific item such as a coffee at Sparty’s, a t-shirt at Spartan Bookstore) and tangible personal property including plaques, flowers, clothing, art, and household goods.
Please reference the Prizes, Awards, Drawings & Raffle Decision Tree as a work aide to determine which section may apply based on activity being conducted.
This section does not apply to payments for services. Please see sections 55 Payroll Department; 71 Honoraria, Speaker Fee and Performer Payments; 75 Disbursement Vouchers; 76 Independent Contractors for U.S. Citizens and Resident Aliens; or 77 Nonresident Alien (NRA) Independent Contractor.
II. Employees
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Cash Payments - two options:
- Lump sum cash payments through payroll. These actions are governed by MSU’s formal “Special Lump Sum Merit Increase” policy through Human Resources.
- Gift cards and gift certificates for a specified dollar value. These are considered cash per the IRS and are taxable. A Special Payment Authorization Form (staff) or Additional Payments Form (faculty) must be submitted to record the amount of the gift card/certificate as taxable to the employee using the non-cash wage type code 7045. If you have multiple employees that you will be processing please contact the Payroll Department (355-5010) for an alternate upload procedure. Gift cards for employees cannot be purchased with the MSU Purchasing Card.
Example: For outstanding customer service, a department awards employees with a $50 gift card to the Spartan Bookstore. The gift cards are taxable to the employee and the value must be reported via an additional pay form.
Note: Student employees are NOT eligible for gift cash payments of any kind.
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Non-cash gifts
Infrequent (once per calendar year recommended), low dollar (not to exceed $100) non-cash gifts (coupon specific item such as a coffee at Sparty’s, a t-shirt, pen, etc.) may be purchased for employees and are considered nontaxable to the employee. Such gifts should only be used to reward work performance and may not be given for personal occasions (birthdays, anniversaries, retirements, etc.). General funds may not be used to purchase such gifts. The total of all non-cash gifts to an employee must not exceed $100 in a calendar year.
Example: For outstanding customer service, a department awards employees at the end of spring semester with a coupon for a sundae at the Dairy Store. Since it is a coupon for a specific item that is both low dollar and given infrequently, it is not taxable to the employee.
Note: Any noncash gift given to student employees should be related to work performance and not include items related to their academic pursuits or achievements (examples of what cannot be given: textbooks, lab equipment, etc.).
III. Students
Awards relating to a student’s academic pursuit or achievements must be reported to the Office of Financial Aid when paid for non-employment purposes. For additional questions please contact the Office of Financial Aid, 353-5940 or https://finaid.msu.edu/contact.asp.
IV. Volunteers and Guests (and other non-employees, non-students)
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Cash Payments
Honoraria payments may be paid on a Disbursement Voucher (Payment Reason Code G) - please see Manual of Business Procedures (MBP) Section 71.
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Gift Cards
Gift cards for volunteers or guests are allowed. The value of the gift card(s) may not exceed $100.
The purchase of such gift cards must be processed via Disbursement Voucher (Payment Reason Code H or I). Use of the MSU Purchasing Card to purchase gift cards for volunteers and guests is not allowed.
Gift cards may not be purchased in bulk and set aside for future gifts. The cards may only be purchased for specific purposes and must be distributed within two weeks of purchase.
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Non-cash Gifts
Non-cash gifts for volunteers or guests may be purchased (use of the MSU Purchasing Card is allowed if otherwise allowable). The value of non-cash gifts may not exceed $100.
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Documentation
When gift cards or other non-cash gifts are purchased for volunteers or guests, detailed receipts and clear documentation of business purpose must be included with a unit’s Disbursement Voucher or MSU Purchasing Card records. The documentation must also include a disbursement log detailing recipient name, amount, and date given.
The cumulative value of gifts (cash, gift cards, and non-cash gifts) to non-employees must be tracked on a calendar year basis by the awarding department. In rare cases where the cumulative value of all gifts in a calendar year is $600 or more, a Gift and Prize Tax Information Form and a Form W-9 must be submitted to the Office of the Controller - Tax Services for tax reporting purposes within 10 days of $600 gift threshold being awarded. If the full amount of gifts to volunteers and guests is made by cash payments made through Disbursement Vouchers only, this form is not necessary.
If the gift is awarded to a Non-Resident Alien (NRA hereafter), there is no minimum for reporting and the department needs to complete a Gift and Prize Tax Information Form and collect a Form W-8BEN from the volunteer. Both documents should be submitted to the Accounting department within 10 days of gift being awarded. The awarding department will be responsible for tax withholding amounts on non-cash gifts awarded to NRA’s. See MBP 77 for further reference of payments to NRA. If the full amount of the gift is made by cash payments made through Disbursement Vouchers only, this form is not necessary.
V. Research Participants
Payment for research participation is not considered a gift. The MSU Purchasing Card and other payment methods may be used to purchase gift cards for research participants where allowable under formal grants or contracts. Please consult your specific grant or contract for eligibility. Please see MBP Section 75, II. B. for vendor and tax reporting information related to research participation payments.
Example: The Kinesiology Department is conducting a study on brain injuries. Participants in the study will receive a $100 gift card for each visit. The department will need to keep track of how much is given to each participant during a calendar year. If the participant is a US Citizen and cumulative value is $600 or more, a Gift and Prize Tax Information Form and a participant’s Form W-9 must be submitted to the Office of the Controller - Tax Services within 10 days of the gift card(s) being awarded and resulting in the $600 threshold being met or exceeded. If participant is a NRA, a Gift and Prize Tax Information Form and a Form W-8BEN must be submitted to Accounting within 10 days of any value of gift card(s) being awarded. The awarding department will be responsible for tax withholding payments. If research participants are paid in cash payments made through Disbursement Vouchers only, this form is not necessary. If the activity is limited to a specific audience, such as employees or students, this section does not apply. Please see applicable sections above.
VI. Prizes for Formal Contests/Drawings, Special Events, and Departmental (Non-Research) Surveys
Prizes that are given during a University activity or event open to the public (i.e. not restricted to only employees or only students), are not considered gifts for the purposes of the policy sections above and are tax reportable in the following instances. If the cumulative value of the prize is $600 or more, a Gift and Prize Tax Information Form and a Form W-9 must be submitted to the Office of the Controller - Tax Services within 10 days of the prize being given. If the prize is given to a NRA, there is no minimum for reporting and a completed Gift and Prize Tax Information Form and a Form W-8BEN must be submitted to the Accounting department within 10 days of prize being given. The awarding department will be responsible for tax withholding amounts on prizes awarded to NRA’s. If the full amount of prizes for an individual are awarded in cash payments made through Disbursement Vouchers only, this form is not necessary regardless if the reporting thresholds have been met. If the activity is limited to a specific audience, such as employees or students, this section does not apply. Please see applicable sections above.
Example: A department hosts a poster contest open to the public, anyone can enter, and the prize is a $600 gift card. If participant is a US Citizen, a Gift and Prize Tax Information Form and a Form W-9 must be submitted to the Office of the Controller - Tax Services within 10 days of gift being given. If participant is a NRA, a Gift and Prize Tax Information Form and a Form W-8BEN must be submitted to the Accounting department within 10 days of gift being given.
VII. Accounting for Gift Cards
The MSU Purchasing Card may not be used to purchase gift cards with the exception of use for research participant incentives (see V. above).
Where their use is allowed, gift cards must be:
- Purchased in quantities ONLY to the extent needed. Extras should not be purchased in advance.
- Purchased cards must be logged in a unit-maintained record. This log must include number of cards, value of cards, business purpose regarding how the cards will be used, who the card was distributed to, intended use of any leftover cards, if any, and final disposition/use of leftover cards (see sample log).
- Leftover cards may only be used for the purposes allowed in this policy.
- While in the possession of the unit, gift cards must always be safeguarded (stored in a secure, locked area).
VIII. Exhibits/Forms
