Finance Department

Prize, Awards, and Gifts Policy

Policy Statement

Union College is committed to compliance in all areas of its operation. Accordingly, the practices set forth below ensure that we find meaningful ways to recognize our students and employees, while also complying with IRS regulations. The Internal Revenue Code states that under certain circumstances the value of prizes and awards/gifts to individuals is considered taxable income. Non-US citizens may be subject to additional tax rules, depending on circumstances and treaty status.

The taxable period is the calendar year, i.e. January 1 through December 31

Reason for the Policy

This policy applies to all faculty, staff, students and non-employees and is intended to clarify the circumstances when gifts, prizes, and awards may be appropriate, along with procedures for submitting recipient information to Finance, and the corresponding tax treatment. This does not cover scholarships. Scholarships are administered by the Financial Aid Office.

Background

In almost all circumstances, gifts, prizes and awards are included in the recipient’s gross income, if the intangible gift is paid for using College funds. Other than for the limited exceptions noted below, if the recipient is faculty, staff, or student employee, the gift, or award is considered supplemental wages and must be processed through the payroll system with appropriate federal, state, and FICA/Medicare taxes withheld. The gift, or award is then included in the recipient’s Form W-2, Wage and Tax Statement or Form 1042-S if they are a nonresident alien. If an employee wins a prize that is for a reason other than related to employment and the contest, program or raffle is open to the general public, then the prize amount will be treated as 1099 income. The recipient will receive a Form 1099-MISC on any winnings totaling over $600.00 in a calendar year.

For non-employees, the prize or award can be processed without tax withholding but is still considered income to the recipient. Such payments are reported as taxable income to the recipient using Form 1099-MISC, Miscellaneous Income. Accounts Payable will require a W-9 be provided before the award is processed.

For students, if the prize or award is related to employment services performed for the college (e.g., outstanding student worker in a department), the prize or award must be processed as supplemental wages via Payroll, with appropriate income taxes withheld. However, if the award is not related to services performed as an employee (e.g. academic achievement, contest), it is still taxable income to the recipient and must be reported on Form 1099-MISC, but it is not subject to withholding.

All awards, regardless of dollar amount, must have a valid, documented business purpose and must comply with all College purchasing, expense and approval procedures.

Definitions and Terms

Award - Cash or noncash items given for exemplary performance or productivity and given in recognition of an accomplishment, achievement, or activity that is tied to a vital business reason.

Cash - Currency, coin, checks, credit or debit card recordings, bank notes, bullion, traveler’s checks, registered checks, and money orders.

Cash Equivalent - An instrument used in lieu of cash but in the same manner. Cash equivalents at Union include gift cards, campus cash, and reloadable debit cards

De Minimis - Gifts, prizes, or awards so small in value that it is not reasonable or practical to account for their value. Cash and cash equivalents are never considered de minimis as defined by the IRS. For College purposes, de minimis is defined as non-cash items having a value of $100 or less and must be provided on an occasional basis.

Gift - Items given to express appreciation or gratitude, not related to job performance, and no negotiation conducted in advance.

Prize - Cash or noncash items received as a result of a game of chance, drawing, or contest of skill, either with or without the purchase of a chance or ticket.

Promotional item - A product branded with the college logo or slogan and distributed at little or no cost to promote the college, the identity, or a specific event or department.

Raffle - Game of chance in which a participant pays money in return for a ticket or other receipt and in which a prize is awarded on the basis of a winning number or numbers, color or colors, or symbol or symbols designated on the ticket or receipt, determined by chance as a result of a drawing from among those thickets or receipts previously sold (NYS General Municipal Law, Section 186.3-b).

Tangible - Any non-cash item provided to an employee/student in recognition of performance, length-of-service, or safety record. Examples include: flowers, books, trophies, plaques, event tickets, food, etc.

Taxable Prize or Award/Gift Form

Union College complies with all IRS regulations concerning the giving of prizes and awards/gifts to faculty, staff, and students of the College. The Taxable Prize or Award/Gift Form collects required information to report the taxable portion of a prize or award/gift.

Any prize or award/gift that appears in the ‘Taxable” column of the Allowable Prizes and Awards/Gifts table must be reported via the Taxable Prize or Award/Gift Form.

Allowable Prizes and Awards/Gifts

NON-TAXABLE TAXABLE*

Miscellaneous Awards/Gifts

Cash n/a ALWAYS taxable No minimum
Gift Cards and Gift Certificates (Unallowable at Union) n/a ALWAYS taxable No minimum

Tangible property valued up to $100 (flowers, books, trophies, plaques, etc)

Non-taxable up to $100 in value Value in excess of $100 is taxable

Occasional tickets to theater or sporting events valued up to $100

Non-taxable up to $100 in value Value in excess of $100 is taxable

Occasional group meals or refreshments for employee recognition events

NEVER taxable n/a

Length-of-service Awards/Gifts

(special rules apply)

Tangible property valued up to $400 (flowers, books, trophies, plaques, etc.)**
Occasional awards/gifts to recognize exceptional safety records Non-taxable up to $100 in value Value in excess of $100 is taxable
Awards/gifts made to more than 10% of department employees n/a ALWAYS taxable No minimum amount
Awards/gifts to employees who previously received an award/gift during the current or preceding four years, regardless of safety record n/a ALWAYS taxable No minimum amount

Prizes (includes academic achievement)

To students, regardless of whether they are employees n/a ALWAYS taxable If total in a given year >$600, reported as taxable income on Form 1099-MISC
To faculty and staff n/a ALWAYS taxable If total in a given year >$600, reported as taxable income on W-2.