2.2.10 Gifts and Awards for University Employees
Formerly Known As Policy Number: 23.8
This Guide Memo provides specific guidelines for occasional gifts, awards, and prizes to university employees in compliance with federal and state regulations. The cognizant vice president, vice provost, dean, or designee should establish guidelines to ensure consistent application of this policy across their business unit. This policy is based on and in alignment with the expectations set forth by AGM 1.1.1: University Code of Conduct, specifically regarding employing sound business practices and exercising prudent financial management in the stewardship of university resources.
Applicability:
This policy applies to all faculty, academic staff, and regular staff as defined in Guide Memo 2.2.1: Definitions.
1. Policy Statement
Schools, departments, and other organizational units (business units) may use appropriate university funding sources to occasionally provide gifts, awards, or prizes to university employees to recognize non-performance-related activities. See Cardinal at Work for information on performance recognition. Each business unit decides who is eligible and what occasion warrants a gift. The cognizant vice president, vice provost, dean, or designee should establish guidelines to ensure consistent application of this policy across their business unit. Gifts may not be presented in place of payment for services. All gifts, awards, or prizes given to university employees are taxable income to the employee except for the following, and then only when given within the parameters detailed in the subsequent sections:
- Tangible length of service/retirement awards
- ‘De Minimis’ tangible gifts, awards, prizes, and sympathy gifts as defined in Section 3
Cash or cash equivalent items, which include all gift cards and gift certificates, are always taxable to the recipient regardless of the amount as required by IRS regulations.
2. Tangible Length of Service/Retirement Awards
A regular staff employee and an academic staff employee must be in active service on their anniversary date to receive the length-of-service award. Length of service is determined by computing the period of service as defined in Guide Memo 2.1.6: Vacations, Section 1.a. The value of the award should be proportionate to the number of years of service recognized (e.g., a 15-year service award is greater than the 10-year service award). Recognition should be made in five-year increments.
To commemorate length of service or retirement, an item or items of tangible personal property with a total value up to $400 can be given on a tax-free basis to an employee with at least five years of service. The value or cost of the length of service or retirement award should not exceed $400 during the taxable (calendar) year. Stanford-branded merchandise or other tangible items, including food, are recommended. Any gifts of cash or cash equivalents, gift cards, or gift certificates are taxable to the employee regardless of the amount. Learn more about employee gifts on Fingate’s Categories of Purchases.
The value of the award should be proportionate to the number of years of service recognized (e.g., a 15-year service award is greater than the 10-year service award). The award must be presented in a meaningful presentation or ceremony. Every attempt should be made to give a length of service/retirement award during the year the anniversary occurs. Business units must ensure that special presentation events are conducted only on an occasional basis and that the costs of these events are reasonable. Recognition should be made in five-year increments.
If the employee elects to retire the same year they become eligible for a length-of-service award, then the maximum total value or cost of the award(s) should not exceed $400 for the award(s) to be nontaxable.
The guidelines above also apply to faculty retirement awards. Faculty members do not participate in the five-year incremental length of service awards or the Stanford Celebrates You program.
Length of service or retirement awards with a value over $400 will be taxable to the extent the value exceeds the dollar limit (e.g., if a $450 award is given, then $50 will be taxable).
3. ‘De Minimis’ Tangible Gifts, Awards, Prizes, and Sympathy Gifts
a. Gifts, Awards, and Prizes
Tangible items of personal property given to an employee as a gift, award or prize should not exceed an aggregate value over the course of a calendar year of more than $100 per individual. Gifts, awards, or prizes that are provided frequently to an employee, even in small amounts, are not considered de minimis. Stanford-branded merchandise or other tangible items, including food, are recommended. Any gifts of cash or cash equivalents, gift cards, or gift certificates are taxable to the employee regardless of the amount.
Donated prizes or gifts used for a raffle drawing or door prize at an employee event must comply with the $100 per individual limit for the prize to be non-taxable to the employee.
Gifts with an aggregate value over $100 will be fully taxable (e.g., if several gifts which total to $150 are given over the course of a calendar year, then $150 will be taxable).
b. Sympathy Gifts
Tangible items of personal property, such as flowers or fruit baskets, may be given to an employee to express sympathy when there is a death or serious illness of the employee’s close family member. The value of the gift should not exceed an aggregate value of $100. Any gifts of cash or cash equivalents, gift cards, or gift certificates are taxable to the employee regardless of the amount.
4. Requesting Payment and Recording Value
The value of a gift, award, or prize may be paid personally and reimbursed by the university or purchased using a university Purchasing Card.
a. Non-taxable Gifts, Awards, and Prizes
The employee’s name and the occasion for the gift (e.g., 10-year service) must be included in the transaction.
b. Taxable Gifts, Awards, and Prizes
The employee’s name, employee ID number, and occasion for the gift must be included in the transaction to allow for the value to be tax reported to the employee on their Form W-2.
5. Employee Morale and Performance-based Awards
This policy does not discuss ordinary business expenses in the promotion of employee morale. Examples of such business expenses are occasional business lunches or office gatherings. For more information, see Administrative Guide Memo 5.4.2: Business and Travel Expenses.
This policy does not discuss performance-based awards or bonuses, which are taxable to the recipient and processed through Payroll.
6. Resources
For more information about employee gifts, please contact the appropriate local human resources manager.