Under Internal Revenue Code (IRC) 132 a gift card, gift certificate or a prepaid Visa/MC is considered a cash or cash equivalent fringe benefit. This type of fringe benefit is additional compensation and taxable to an employee, non-employee, student, or research participant. If more than one gift card is purchased at a time a gift card log must be kept up to date and on file in the department. For more information, see Gift Card Log Procedures section below. Once all the gift cards have been distributed, the gift card log must be attached to the original purchase transaction. If you have any questions, call 435-797-0589.
Ways to Pay for the Gift Cards
- P-Card: A gift card may be purchased with a P-Card. The P-Card transaction must include the receipt for the gift card(s). Please see P-Card Procedures for more information.
- EZ-Buy Direct Pay Form (Award/Prize/Gift Card): The check will need to be picked up at the Cashier's Office in the TSC room 248 for the department to purchase the gift card.
- Gift Card Purchases are not reimbursable.
Gift Card Log Procedures
An employee in your department should serve as a Gift Card Custodian. They are responsible for securing the gift cards and maintaining a gift card log. (See the Confidential Research Subjects section for exceptions to this requirement.)
The gift card log should contain at a minimum:
- gift card purchase date
- ID number of each card
- amount of each card
- reason the gift card was given
- date received
- acknowledgement of receipt
- signature of recipient on the gift card log,
- an e-mail response from the recipient stating that the card was received,
- for electronic gift cards, a vendor's confirmation of delivery showing the recipient(s) and the amount(s).
- If acknowledgement of receipt is not available by any of the above methods, then a second employee should sign the log verifying the disbursement of the cards to the listed recipients(s). If cards are mailed, then two employees should sign the log verifying that the cards were mailed to the listed recipient(s) at the listed corresponding address(es).
- signature of Gift Card Custodian
Business Services should periodically reconcile the gift card log. Once all gift cards are distributed a final reconciliation must be completed before attaching the log to the P-Card or EZ-Buy transaction. The final reconciliation should include the signature of the person who completed the reconciliation.
A reconciliation, in this instance, means: to assure all gift cards that were purchased are accounted for on the log and are being used/were used for the appropriate University-approved purposes.
For Students
The University complies with the IRS Regulations by reporting payments that total $600 or more over the calendar year on the 1099-MISC Form. The Internal Revenue Service considers gift cards to be non-compensatory taxable income to the student. These payments may be considered income when determining a student's financial aid package and have an impact on other need-based financial aid the student may receive.
Please report gift card information in Service Now.
Taxable Gift and Award Submission
For USU Employees
Gift Cards are considered cash equivalent and taxable to the employee. There is no "minimum amount" payment that is considered tax-free. If the recipient is an employee at USU, applicable payroll taxes will be withheld from the employee's next paycheck.
Please report gift card recipient information in Service Now.
Taxable Gift and Award Submission
For Non-Employees/Non-Students
A gift card is considered a cash equivalent to a non-employee research participant. The University complies with IRS Regulations by reporting any form of non-employee compensation that totals $600 or more over a calendar year on 1099-MISC Form.
Please report gift card information in Service Now.
Taxable Gift and Award Submission
Confidential Research Subjects
For research projects ruled confidential by the Institutional Review Board (IRB), a modified log should be maintained by the department gift card custodian. This log should contain the following:
- gift card purchase date
- ID number of each card
- amount of each card
- signature of the PI next to cards received
- signature of Gift Card Custodian
- date received by the PI
- IRB number of the research project
This is an example of a cash/gift card log that may be used: Research Subject Cash/Gift Card Log.
Once all gift cards are distributed to the PI, the completed log including the signature of the custodian must be attached to the P-Card or EZ-Buy transaction.
In addition, the PI must keep a confidential log containing the following information:
- ID number of each card
- amount of each card
- signature of the recipient
- signature of PI giving the gift card
- date received by the recipient
- IRB number of the research project
This confidential log would be kept in the PI's files subject to random audit.
The "Participant Population" form from the IRB system, (PROTIS or KUALI) should be attached to the P-Card transaction documenting whether the recipients will receive $600 or more during the year. If any individual is awarded $600 or more, it is required that a W-9 be submitted to the Controller's Office for tax reporting purposes. No information regarding the nature of the project should be attached.