Gift Card Policy
Gift Card Purchase: Policy and Procedures
- Gift Cards or Certificates to Employees
- Gift Cards or Certificates to Non-Employees
- Research or Survey Participants
- Gift Cards/Certificates to Nonresident Aliens
The purpose of this Policy is to set forth the guidelines and procedures for the purchase and distribution of gifts and gift cards/certificates purchased with University funds to ensure compliance with the University’s tax withholding and reporting obligations. Gift cards may not be purchased via the procurement card or via check requisition, all gift card requests must be made through the University Purchasing Department in order to ensure compliance with this policy.
According to the rules of the Internal Revenue Service (the “IRS”), because cash and cash equivalents, such as gift cards/certificates, have a readily ascertainable value, they are considered taxable income regardless of the face amount of the gift card/certificates. For employees, the value of gifts and gift cards/certificates is considered compensation subject to federal, state and employment tax withholding, and reporting on Form W-2. There is no de minimis fringe benefit amount relating to gift cards/certificates. For non-employees, the value of all gifts and gift cards/certificates in an aggregate amount of $600.00 or more per calendar year must be reported to the IRS on Form 1099-MISC as other compensation. Finally, gift cards/certificates given to nonresident aliens are subject to federal tax withholding which the department will be responsible for unless an exception applies.
Any gift card/certificate purchased with University funds and given to an employee will be considered taxable income to the employee and added to their Form W-2 during the calendar year the gift card was received. There is no minimum dollar amount for this rule. As such, gift cards to employees are discouraged and requests for any special type of employee recognition should be paid via University payroll.
Gift cards presented to Non-employees may be taxable and reportable income on form 1099-MISC to the recipient if they are over $600.00. Gift cards should not be given in exchange for services. The University will track all compensation received by such individuals, if the individual receives other awards or payments during the calendar year in excess of $600, the entire amount will be reported on Form 1099-MISC. A gift card log must be kept for such individuals and a form W-9 requested at the time of gift card distribution if there is any indication that an individual might receive $600 during the year.
Payment to participants of LUC research or survey projects may be compensated with a gift card; however such compensation may be taxable income to the recipient. The University will track all compensation received by such individuals, if the individual receives other awards or payments during the calendar year in excess of $600, the entire amount will be reported on Form 1099-MISC. A gift card log must be kept for such individuals and a W-9 Form (instructions) requested at the time of gift card distribution if there is any indication that an individual might receive $600 during the year.
All awards to nonresident aliens are subject to federal tax withholding unless an income tax treaty exception applies. In order to determine whether the gift card will be subject to tax, he or she must enter all of their information into the GLACIER Nonresident Alien Tax Compliance system. Once you have determined that the visitor or student is present on a visa, send an e-mail to firstname.lastname@example.org with the individual’s name and email address to request a login and password for Glacier. Please also include the dollar amount of the gift card to be awarded. This should be done PRIOR to the gift card distribution. A completed Tax Summary Packet (generated by Glacier) must be submitted to General Accounting at email@example.com. Additional tax treaty documents will also be required if applicable.
If an income treaty exception does not apply, 30% federal tax withholding will apply and the department will be responsible for the tax and tax gross up since tax cannot be withheld from the gift card/certificate. For example, a nonresident alien student wins a $100 gift card. The gift card amount would be grossed up to $142.86; the department would be charged the additional $42.86 of tax so that after the 30% tax remittance, the student nets the $100 gift card amount. Please contact firstname.lastname@example.org if you are processing a gift card to a nonresident alien present on an F-1, J-1, H-1B or Visitor visa.
For more information on Glacier, please visit Loyola’s GLACIER Nonresident Alien Tax Compliance page.
In order to purchase a gift card please complete the appropriate Purchase Requisition and include a completed Gift Card Purchase Authorization Form. Send the completed documents to your designated purchasing agent: HSD Purchasing at Purchasing@luc.edu or Lakeside Purchasing at Purchasing@luc.edu.
A separate authorization form must be completed for each program or activity - i.e. a specific study, a specific event, etc. and must be specified in the "Description of Intended Use of Gift Cards" section on the form. It is recommended to limit the number of gift cards purchased at one time so that the disbursement and reconciliation of those cards is more manageable.
Once Purchasing approves the request and the gift cards/certificates are issued, the department will be responsible for filling out a Gift Card/Gift Certificate Disbursement Log. The log is required to record the disbursement of all gift cards purchased - even if only one card is purchased for one individual.
The Gift Card Disbursement Log will require the department to collect the following information from the gift card recipients:
- Name/Study Subject Number
- Recipient Status (LUC Employee, LUC Student, Other)
- LUC Employee or LUC Student Only – Last 4 digits of SSN
- Tax Status: Nonresident Alien (YES or NO)
- Amount of Gift Card Awarded
- Recipient Signature/Initials
As previously stated, if there is any indication that an individual might receive $600 during the calendar year whether it is the form of gift cards or other payments from LUC, a Form W-9 should be requested at the time of gift card distribution.
The Department will need to be able to reconcile all gift cards purchased on a Purchase Order. For example, if a department purchases 5 Gift Cards for $50 but only disburses 2 gift cards, their disbursement log should reflect that 3 gift cards still remain open. When the department disburses the remaining gift cards, an additional log should be filled out.
Filling out the Log:
- Enter the Department Name that purchased the Gift Cards
- Enter the Name of the Contact Person or Principal Investigator who can be contacted if further information is needed
- Enter the name of the Event or Program
- Enter the Purchase Order Number which the gift cards were purchased on. If several gift cards are being disbursed purchased on separate purchase orders, every effort should be made to keep each purchase order separately.
- Enter the Accounting Unit where the gift cards were charged
- Enter the Beginning Purchase Amount of the Purchase Order
- If any previous gift cards have been disbursed, enter that amount
Enter the name of the person receiving the card under Recipient Name or enter the Study subject Number
- Enter the date of distribution
- Indicate whether the individual is an LUC employee, LUC student, or no LUC affiliation (Other)
- If the recipient is an LUC employee or student , provide the last 4 digits of their Social Security Number
- Indicate if they are a Nonresident Alien by selecting YES or NO (If yes is selected, he or she must enter all of their data into the GLACIER Nonresident Alien Tax Compliance system). Send an e-mail to email@example.com to request and login and password.
- Enter the gift card amount. Once the amounts are entered in, the “Amount of Gift Cards Distributed” box will populate itself with the total distributed
- Ask the person receiving the gift card to sign their name in the signature field. If the individual is a Study participant they may enter their Study Subject Number
- Once the log is complete, the individual filling out the log should sign at the bottom
- The log should be completed during distribution and should be sent to either SPA or General Accounting to complete the reconciliation of the disbursement. The log should be sent by no later than the end of the month during which the disbursement occurred. A copy should be kept for departmental files.
- If the AU begins with a 2, 5, 103XXX or 104XXX please send the completed Gift Log to SPA at GRNTCON@LUC.EDU
- All other AU requests should be sent to General Accounting at ACCOUNTING@LUC.EDU
- Once SPA or General Accounting receives the completed log, the amount of gift cards disbursed will be moved from the advance account (1273) and posted to the appropriate expense account.
Gift Cards should be kept under lock and key at all times to ensure proper physical security and to protect from theft and loss. Access to the gift cards and keys to the lock areas should be limited to the individual(s) responsible for safekeeping of the gift cards.
If you have any questions on purchasing a gift card, please contact your designated purchasing agent at firstname.lastname@example.org.