7.11 Gift Cards Policy

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Chapter 7: General Finance Provisions 


Related Minnesota State Board Policy: 7.3 Financial Administration

Related Minnesota State Board Procedure:

Minnesota State Tax Information

Minnesota State Prize/Award Payee Acknowledgment Form (SSN)

Minnesota State Prizes and Awards Reporting Spreadsheet

7.3.3 Purchasing Cards

Purpose: 

College faculty and staff occasionally want to use gift cards to compensate individuals such as event volunteers or research study participants. As cash-equivalent instruments, gift cards are governed by tax rules and internal control requirements. These rules and requirements must be followed and communicated to those involved before purchase or distribution of any gift cards.
 
This policy applies to all College personnel and is limited to gift cards funded by the College or where payments will be made by the College from some external funding source (a grant or research contract). The portions of the policy related to tax reporting are also applicable to distributions of any gifts and awards of non-cash tangible items with a fair market value greater than $5 if funded by the College.

For employees, the value of gifts and gift cards is considered compensation subject to federal, state and employment tax withholding, and reporting on Form W-2.  For non-employees, including students, the value of all gifts and gift cards 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, gifts and gift cards given to nonresident aliens are subject to federal tax withholding.

Part 1: Scope
Subpart A:

This Policy applies to any purchase and/or distribution of gifts and gift cards using College funds, including the purchase of gifts and gift cards using the Purchasing card ("PCard"), as well as the distribution of gifts and gift cards that have been donated to the College.

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Part 2: Definitions

Subpart A:

Gift Card means a stored-value or similar instrument issued in lieu of cash or check. For purposes of this policy “gift card” includes gift certificates.

Subpart B:

Responsible Employee means the faculty or staff member in the department disbursing the gift cards that is responsible for the documentation, internal control and other requirements of this policy. For sponsored projects, the Principal Investigator (PI) is the Responsible Employee and cannot delegate this role.

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Part 3: Use, Approval, and Distribution of Gift Cards
 

Use of gift cards should only be considered when no other option is viable, should be infrequent and conservative in value.

An “Authorization for the Purchase of Gift Cards/Gift Certificates” must be completed PRIOR to purchasing gift cards.  Purchase requests for the purchase of gift cards submitted without a properly completed Authorization Form will be rejected.  No purchase of a gift card/certificate will be reimbursed without a properly completed Authorization Form. If using a PCard for the gift card/certificate purchase, a completed copy of the Authorization Form must accompany the PCard log.  The signature of the appropriate Dean, Director or Vice President is required for the purchase of ANY gift cards.

The authorization must be for a single intended purpose, which must be clearly identified on the form.  It is recommended to limit the number of gift cards purchased at one time so that the disbursement documentation is more manageable.  If multiple gift cards are purchased, appropriate measures must be taken to safeguard any gift cards that are not distributed immediately. It is strongly recommended that gift cards be purchased in modest denominations, normally not in excess of $50.00 per gift card/certificate.  Gifts and gift cards may NOT be distributed in lieu of cash compensation such as wages or consultant fees.

Gifts and gift cards that have been donated to the College are subject to all of the record-keeping procedures outlined in this policy and companion Procedure 7.11.1.  The distribution of gifts and gift cards must not be used to avoid compliance with other applicable Minnesota State or College Policies, Procedures and Operating Guidelines, e.g., Worker Classification (Employee vs. Independent Contractor).

The Purchasing and Contracts department will conduct periodic audits to ensure that College departments have complied fully with the gift card reporting requirements set forth in this Policy and companion procedure.

Violation of this policy and procedure or failure to cooperate in complying with its provisions by any individuals who purchase or distribute gifts or gift cards on behalf of the College may result in disciplinary action up to and including dismissal.  If a PCard holder is found to have violated this Policy, the employee may lose their PCard privileges.

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  Policy History:
Date of Implementation:  12/06/2018
Department Owner: Finance
Next Review Date: 12/06/2022
Subject of Revisions:
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