Gifts purchased with university funds are taxable to the recipient (employee or non-employee), per IRS regulations, if any of the following statements are true:

• The aggregate value of the gift is greater than $75; or
• The gifts are provided on a routine basis; or
• The gift is provided in the form of cash (i.e. cash, check, gift card, gift certificate, etc.).

Note:  The IRS provides more detailed guidelines regarding length of service and retirement gifts.  See below.

An employee must be in active service on his/her anniversary date to receive the length-of-service gift.  The following length of service/retirement guidelines have been developed according to IRS regulations.  Gifts which adhere to the following parameters and are given to eligible employees are not subject to taxes:

• Timing - Gifts may not be made within the employee's first five years of service or more frequently than every five years.  Gifts given more often than these requirements will be taxable in full.

• Dollar limit - The value or cost of the gift should not exceed $400.  It is also recommended that the value or cost of the gift commensurate with the number of years of service being recognized (e.g. the 15 year service gift is greater than the 10 year service gift).  Length of service or retirement gifts with a value or cost over $400 will be taxable to the extent the value or cost exceeds the dollar limit (e.g. if a $450 gift is given, then $50 will be taxable).

• Form of Gifts - In order to avoid taxable income, the gift must be in the form of tangible personal property.  The IRS does not consider gift certificates to be tangible personal property, and accordingly, they are subject to tax.  If the gift is in the form of cash, check, gift card or gift certificate, the value of such item is treated as additional wages and taxable regardless of the amount.

• Meaningful Presentation - The gift must be presented as part of a special event or celebration that marks the occasion, such as a departmental meeting, party or luncheon/dinner.

• Conditions and circumstances - The gift must be under conditions and circumstances that do not create a significant likelihood of disguised compensation.

The following chart provides a summary of the tax rules that will be applied for gifts given to U.S. citizens, resident aliens and non-resident aliens.

If a gift provided to an employee should be deemed taxable per the guidelines outlined above then the value of the gift provided must be included in the employees' income and are subject to federal, state and local income tax withholding and social security and Medicare taxes.

To report a taxable gift to an employee, please complete the Employee Gift Processing Form.

The original form should be sent to Payroll Services in the UTDC building (4516 Henry Street) to be processed within 30 DAYS of the purchase of the gift.  A copy of the employee gift form should be attached to the PRC or expense report, depending on how the gift was purchased, to verify that the gift reporting process was completed.

Please note: If the above steps are not completed within 30 days of the purchase of a gift with a university purchasing card the cardholder may be assessed purchasing card points by PCard Audit.

If a gift provided to a non-employee should be deemed taxable per the guidelines outlined above then the value of the gift provided must be reported to the individual as taxable income.

To report a taxable gift to a non-employee, please complete the Non-Employee Gift Processing Form.

If the gift recipient is a U.S. Citizen or U.S. taxing resident, please complete a W-9 form and attach to the Non-Employee Gift Processing Form.

If the gift recipient is a foreign national or non-resident alien (not a U.S. citizen or taxing resident), the Foreign National Information Form must be completed and attached to the Non-Employee Gift Processing Form.

The original form should be sent to Accounts Payable in the UTDC building (4516 Henry Street) to be processed within 30 DAYS of the purchase of the gift.  A copy of the employee gift form should be attached to the PRC or expense report, depending on how the gift was purchased, to verify that the gift reporting process was completed.

Note:  If the combined total of value of the gifts received and compensation for services rendered exceeds $600 in any calendar year for a non-employee, a Form-1099-MISC will be issued.

Please note: If the above steps are not completed within 30 days of the purchase of a gift with a university purchasing card the cardholder may be assessed purchasing card points by PCard Audit.

1. An employee does an exceptional job on a particular assignment, and for their hard work, receives a $75 gift card.  This is taxable income because gift cards in any amount are considered cash and included in income.  If the employee received a CMU sweatshirt valued at $75 or less, this would not be taxable.
2. A department holds a summer picnic with games.  The grand prize for the event is a $50 gas card.  This is taxable because gift cards are cash equivalent.  Instead, the prize is a small trophy (valued at less than $75) which is not taxable.
3. A guest is invited to speak at a University event.  The department hosting the event gives the guest a bottle of wine as a token of appreciation.  The bottle of wine is valued at $75 or less, so the gift is nontaxable.  If the bottle of wine was valued over $75 or the token of appreciation was a $75 gift card, this would constitute taxable income for the guest.
4. An employee is leaving the University after 25 years of service.  Fellow employees decide to present the departing employee with a plaque at a luncheon, in recognition, of the service put forth.  Plaque costs $350.00 which is not taxable.  If the plaque's cost was $750.00 then $350.00 of that would be taxable.