7.11.1 Gift Cards Procedure

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Chapter 7: General Finance Provisions

Related Minnesota State Board Policy: 7.3 Financial Administration
Related Minnesota State Board Procedure:

Introduction: 
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. When gift cards are distributed, they must be distributed in accordance with the guidelines set forth in this procedure.
 
Part 1: 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” included 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 2: Process
 Subpart A:

An executed “Authorization for the Purchase of Gift Cards/Certificates” (Exhibit A) is required for each gift card/certificate transaction, which must include the following information:
1. Purchaser’s Name;
2. Purchaser’s Department;  
3. Purchaser’s Signature;  
4. Vendor Name (entity from which  gift cards/certificates are to be purchased);  
5. Date and Aggregate Amount of gift cards/certificates;  
6. Description of what is  to be Purchased (number/face amount of gift cards/certificates  to be purchased);
7. Description of Intended Use of gift Cards/Certificates (e.g., drawing, student recognition);  
8. Method of Purchase/Acquisition (e.g., Pcard, Check Request, Personal Purchase, Donation);  
9. Month/Year cards are to be distributed;   
10. Department Cost Center to be charged; and   
11. Identify Responsible Employee;
12. Appropriate Authorized Signature (i.e., Dean, Director or Vice President) and Date
 Subpart B:

An executed “Gift, Gift Card/Certificate Acceptance Agreement” (Exhibit B) must be completed for each gift or gift card/certificate distributed. A recipient cannot receive a gift card if he or she refuses to provide the requested information.
The Acceptance Agreement shall contain the following information:
1. The recipient’s name, address and email address;  
2. The recipient’s StarID or Normandale Tech ID (for students and employees)
3. The recipient’s status as either a citizen/resident alien or nonresident alien;  
4. Acknowledgement that IRS Form W-9 was provided (if not an employee) and last four digits of the recipients Social Security Number;
5. Description of the gift, gift card/certificate;  
6. The value of the gift, gift card/certificate; and  
7. The recipient’s signature and date 
Subpart C: A “Gift Card/Certificate Disbursement Log” (the “Log”) (Exhibit C) is required to record the dispensing of all gift cards–even if only one gift card is purchased for one individual.  The original proof of purchase, Authorization Form and Acceptance Agreement must be kept on file by the department, together with the Log.  The responsible employee disbursing the gift cards/certificates must update the Log each time a gift card/certificate is disbursed.  The following information must be entered for each gift card/certificate distributed:
1. the date of distribution;
2. the recipient’s name;
3. the recipient’s status (i.e., employee or non-employee);
4. if the recipient is an employee or student, the recipient’s Star ID or Tech ID number;
5. if the recipient is not an employee, acknowledgement that IRS Form W-9 may be requested and last four digits of social security number or federal tax ID number;
6. the recipient’s status as a nonresident alien;  
7. the Vendor Name and Gift Card Number;
8. the Face Amount of the gift card
9. the Recipient’s signature
Subpart D: The responsible employee must submit a copy of the Log, together with a copy of related Authorization Forms and Acceptance Agreements, to Purchasing and Contracts Office within 30 days of the date the final gift card is distributed. In the event a gift card campaign crosses over the calendar year-end, December 31st, a separate log will need to be submitted for each calendar year.

For the month ending December 31, the Log must be submitted by December 15th.  No gifts or gift cards/certificates should be given to employees after December 15th of each year. 

If it is determined that in any calendar year a non-employee has received an amount of $600.00 or more, the Purchasing and Contracts Office will be responsible for obtaining an IRS Form W-9, Request for Taxpayer Identification Number and Certification, from the non-employee recipient. If gifts or gift cards/certificates have been distributed to nonresident aliens, the Department issuing the gifts or gift cards will be responsible for all applicable taxes. 
Subpart E: It is the responsibility of the department to ensure that sensitive data are protected. To ensure that personal financial information is not inadvertently disclosed, all Forms W-9 should be sent to the Purchasing and Contracts Office and should not be retained by the department.  Under no circumstances should full social security numbers be kept on a local desktop, laptop or other computing device. 
Subpart F: Gift Cards to Non-resident Aliens

All awards to nonresident aliens are subject to federal tax withholding unless an income tax treaty exception applies. Additional tax treaty documents will also be required if applicable. If a 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.  Contact Fiscal Services for information regarding processing a gift card to a nonresident alien present on an F-1, J-1, H-1B or Visitor visa.

Gross up calculation: Gift Card Value ÷ .70 = Grossed up amount
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  Policy History:
Date of Adoption:  12/06/2018
Department Owner:  Business Office
Next Review Date: 12/06/2022
Subject of Revisions:
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