05.159 Purchase of Gifts for Employees

Vice Chancellor of Business Affairs

Updated March 1, 2023; October 31, 2017; Updated June 30, 2015; Updated February 26, 2007; Effective March 14, 2000; supersedes former Administration Policy No. PUR1.70, “Purchase of Gifts for Employees”

IRS Code, Office of State Budget and Management

• 05.001 Discretionary Trust Funds Spending Policy
• De Minimis Fringe Benefits

Controller

Policy Details:

1. Purpose

   Establishes consistent, campus-wide policies and procedures governing items purchased by the university and given as gifts to employees, including gifts given to employees or their family members as expressions of sympathy.

   The intent of this policy is to:

   1. Ensure consistent treatment of employees across divisions.

   2. Ensure compliance with university funding restrictions, state purchasing guidelines, and other applicable regulations. This is particularly important because, as a public agency, the University of North Carolina Wilmington is subject to public scrutiny regarding its use of public funds.

   3. Ensure compliance with IRS regulations regarding the taxability of gifts to employees.

2. Scope

   This policy applies to all university departments and activities.

   Items governed by this policy are limited to items purchased or reimbursed by the university and given as gifts for employees.

   Exclusions to this policy:

   For information regarding gifts or awards presented by university- sponsored Employee Awards or Recognition Programs (see Policy Section A), contact Human Resources.

3. Policy

   1. General Policy

      The University of North Carolina Wilmington recognizes that its success in providing quality education and effective, efficient services is dependent largely upon the efforts made by competent and dedicated employees. As such, the university has established several campus-wide programs as an official means of showing appreciation to its valued employees:

      1. Employee Award Programs

         Examples: Faculty Teaching Excellence Award and Staff Excellence Award

      2. Employee Recognition Programs

         Example: Employee Service Awards

         Additional gifts to employees (outside of the university-sponsored Employee Award or Recognition Programs) are allowed only for certain work-related events and for expressions of sympathy as specified in Policy Section B.

         University departments or divisions that wish to present employees with such gifts must comply with the guidelines in this policy, with the purchasing provisions of the State of North Carolina, and with any other applicable state or federal laws and regulations.

   2. Types of Allowable Gifts

      University policy generally prohibits the university from giving gifts to individual employees from any source of funds or for any purpose, except for service recognition gifts and sympathy gifts. Gifts may be given to groups of employees to recognize team performance or for their participation in university events or activities. General funds cannot be used for the purchase of gifts. The purchase of gifts, including gift cards, cannot be purchased with purchasing cards or purchase orders without express approval from the Controller’s Office.

      1. Gifts for Length of Service

         Departments or divisions may give recognition gifts to employees for length of service, subject to the following restrictions:

         1. Gifts must be given as a part of a meaningful ceremony.

         2. The employee must have completed at least five years of service and must not have received a similar gift in any of the prior four years.

         3. Gifts may not exceed $400.

      2. Gifts for Retiring or Separating Employees

         1. Such gifts must be given as a part of a meaningful ceremony, such as in conjunction with a retirement or separation reception.

         2. The value of the gift may depend upon the length of service but may not exceed $400.

         3. Regardless of the amount, gift cards given as retirement or separation gifts are taxable to the employee (see Policy Section E below).

      3. Gifts for Team Performance

         1. Gifts may be given to groups of employees to show appreciation for their team efforts and performance and should be one of a number of identical items.

         2. Gifts should be infrequent to comply with IRS regulations.

         3. Gifts must be given as a part of a meaningful ceremony.

         4. Gifts may not exceed $75. Gifts valued in excess of $75 will be taxed through Payroll and included as wages on Form W-2.

         5. Regardless of the amount, gift cards given to employees to recognize team performance are taxable to the employee (see Policy Section E below).

      4. Gifts for Participants

         1. Gifts of this type should be one of a number of identical items widely distributed to a group of employees for their participation in university-sponsored events or other university activities.

         2. Gifts should be infrequent to comply with IRS regulations.

         3. Gifts may not exceed $75. Gifts valued in excess of $75 will be taxed through Payroll and included as wages on Form W-2.

         4. Regardless of the amount, gift cards given to employees for participating in a university-sponsored event are taxable to the employee (see Policy Section E below).

         5. If the primary purpose of the purchased item(s) is to benefit the university-sponsored event or activity and the item(s) typically becomes an employee’s personal property after such use, these are not considered "gifts" (see applicable Policy 05.158). (Example: Shirts customized with a UNCW logo may be provided for employees to wear while assisting in student orientation activities.)

      5. Sympathy Gifts

         1. Departments may send appropriate traditional commemorations (tangible personal property such as flowers, fruit baskets, etc. generally under $200) for the illness or death of an employee or family member of an employee.

         2. Cash donations to third parties as sympathy gifts or memorial gifts are not allowed when using university funds. In addition, cash donations cannot be collected and processed through UNCW.

   3. Unallowable Gifts

      1. Cash

         Cash gifts to employees are not allowable.

      2. Compensation for Services Performed

         Gifts should not be given for services performed in lieu of compensation. Payments for services provided by employees are processed through Payroll and are subject to FICA, state and federal taxes, and state retirement withholding.

   4. Frequency of Gifts

      Gifts should be infrequent to comply with IRS regulations.

   5. Gift Cards/Certificates

      1. Per IRS guidelines, gift cards/certificates of any amount are considered cash and therefore not de minimis.

      2. Regardless of the amount, gift cards given to employees for any reason are taxable to the employee.

         1. If the gift card is provided to an employee within the scope of their employment, the value of the gift card must be applied to the employee’s next applicable paycheck and included in their annual W-2.

         2. If the gift card is provided to an employee for their participation in a research study, the value of the gift card may be reportable on a 1099-MISC.

      3. There are no exceptions to the IRS guidelines for gift cards/certificates presented to separating or retiring employees. Payroll must be notified of the gift before the employee receives his/her final paycheck.

      4. See university Gift Card Guidelines and Procedures on the Direct Pay webpage for more information.

   6. Allowable Funding Sources

      Gifts to employees may be paid from the following funding sources:

      1. Appropriate agency funds.

      2. Unrestricted endowment income, such as discretionary funds established for the chancellor or vice chancellors.

      3. Other appropriate unrestricted trust funds, such as unrestricted gifts and income available for general program enhancement.

      4. Enterprise funds whose revenue is derived primarily from sources other than university departments (such as Housing, Food Services, and Parking).

      5. Gifts, grants, or contracts that specifically provide for the purchase of such gifts.

         Special notes regarding funding from contracts and grant funds:

         1. Prior approval from Sponsored Programs and Research Compliance is always required.

         2. Sympathy gifts may not be purchased from any contract and grant funds, regardless of the recipient.

   7. Unallowable Funding Sources

      Gifts to employees are strictly prohibited from the following funding sources:

      1. General funds (state appropriations).

      2. Gifts, grants, or contracts that do not specifically provide for the purchase of such gifts.

      3. Federal indirect costs.

      4. Enterprise funds, if the sales or service is directed primarily to university departments (such as Warehouse Services, Printing Services, and Telecommunications).

      5. Student Fees

   8. Required Electronic and/or Written Approvals

      Electronic and/or written approval from the following is required for all purchases of gifts for employees:

      1. A budget authority for the fund to be charged.

      2. As applicable, a Sponsored Programs and Research Compliance Grants Officer.

   9. Required Documentation

      The following documentation is required to support the payment and/or reimbursement of all gift purchases for employees:

      1. Itemized paid receipts.

      2. Documentation to adequately justify the purpose and reasonableness of the gift.

      3. Electronic and/or written approvals, as indicated above.

   10. Exchange of Personal Gifts among Employees

       This policy does not prohibit the exchange of gifts from one employee (or group of employees) to another employee for occasions such as baby showers, holiday gift exchanges, birthdays, employees leaving university employment, etc., subject to the following conditions:

       1. University supervisors must not solicit or compel individual contributions to such a gift,

       2. University employees must not compel individual contributions to such a gift; and

       3. University funds, from any source, must not be contributed to such a gift.