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Policy: Gifts, Gift Cards, and Gift Certificates

 

Effective Date: January 1, 2014

Responsible Officer: Executive Vice President, Treasurer & COO

 

Exhibits/Forms:

 

Exhibit A - Authorization for the Purchase of Gift Cards/Gift Certificates

Exhibit B - Gift, Gift Card/Certificate Acceptance Agreement

Exhibit C - Gift Card/Certificate Disbursement Log

Exhibit D - Human Subject Voucher

I.          PURPOSE:

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.  According to the rules of the Internal Revenue Service (the “IRS”), because cash and cash equivalent fringe benefits, such as gift cards/certificates, have a readily ascertainable value, they do not constitute de minimis fringe benefits, regardless of the face amount of the gift card/certificates.  Likewise, gifts (other than gift cards or gift certificates) purchased with University funds having a retail value in excess of Fifty Dollars ($50.00) (“Gifts”) are also not considered de minimis for tax reporting purposes and are, therefore, subject to this Policy. 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.  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, gifts and gift cards/certificates given to nonresident aliens are subject to federal tax withholding.

II.        SCOPE:

This Policy applies to any purchase and/or distribution of gifts and gift cards/certificates using University funds, including the purchase of gifts and gift cards/certificates using the Purchasing card (“PCard”), as well as the distribution of gifts and gift cards/certificates that have been donated to the University. This Policy is also applicable to all distributions of Dragon Cards/Dollars.

III.       COVERED MEMBERS OF THE UNIVERSITY COMMUNITY:

This Policy applies to all University trustees, officers, employees and students of the University and/or any of its subsidiaries or affiliates.

IV.       POLICY:

An “Authorization for the Purchase of Gift Cards/Gift Certificates” must be completed PRIOR to purchasing gift cards/certificates.  Check requests for the purchase of gift cards/certificates 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 reconciliation of the PCard statement.  The signature of the appropriate Dean, Department Chair or Business Administrator is required for the purchase of ANY gift cards/certificates. 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/certificates purchased at one time so that the disbursement documentation is more manageable.  If multiple gift cards/certificates are purchased, appropriate measures must be taken to safeguard any gift cards/certificates that are not distributed immediately. It is strongly recommended that gift cards/certificates be purchased in modest denominations, i.e., not in excess of $100.00 per gift card/certificate.  Gifts and gift cards/certificates may NOT be distributed in lieu of cash compensation.  For example, gifts and gift cards/certificates may NOT be used in any of the following situations:

  • to compensate speakers;
  • to express appreciation to volunteers;
  • to compensate note-takers assisting other students. 

 The distribution of Dragon Cards/ Dollars is subject to the same procedures as the distribution of any other gift card/certificate.

Gifts and gift cards/certificates that have been donated to the University are subject to all of the record-keeping procedures outlined in Section V, below.  The distribution of gifts and gift cards/certificates must not be used to avoid compliance with other applicable University Policies, e.g., the Policy on Independent Contractor Classification.

The Procurement and Accounts Payable departments will conduct periodic audits to ensure that University departments have complied fully with the gift card/certificate reporting requirements set forth in this Policy.

V.        PROCEDURES:

A. An executed “Authorization for the Purchase of Gift Cards/Certificates” (attached as 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. Fund/Org to be charged; and   
  11. Appropriate Authorized Signature (i.e., Dean, Department Chair or Business Administrator) and Date.

B.  An executed “Gift, Gift Card/Certificate Acceptance Agreement” (attached as Exhibit B) must be completed for each gift or gift card/certificate distributed. The Acceptance Agreement shall contain the following information:

  1. The recipient’s name, address and email address;  
  2. The recipient’s Drexel I.D. number or the last four digits of the recipients’ social security number (if not a student or employee);  
  3. The recipient’s status as either a citizen/resident alien or nonresident alien;  
  4. Description of the gift, gift card/certificate;  
  5. The value of the gift, gift card/certificate; and  
  6. The recipient’s signature and date.  

C.   A “Gift Card/Certificate Disbursement Log” (the “Log”) (attached as Exhibit C) is required to record the dispensing of all gift cards/certificates purchased by the department – 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 Log must contain the following information:

  1. The individual 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: (a) the date of distribution; (b) the recipient’s name; (c) the recipient’s status (i.e., employee or non-employee); (d) if the recipient is an employee or student, the recipient’s University I.D. number; (e) if the recipient is not a student or employee, the last four digits of the recipient’s social security number; (f) whether the recipient is a nonresident alien.  
  2. The vendor from whom the gift card/certificate was purchased, as well as the gift card/certificate number must be identified and entered in the “Vendor Name and Gift Card/Certificate Number” column of the Log.  The Face Amount of the gift card/certificate must be entered in the “Amount” column.  
  3. The method of purchase.            

D.  The department must submit a copy of the Log, together with a copy of related Authorization Forms and Acceptance Agreements, to Accounts Payable within 30 days of the event.  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 Accounts Payable Department will notify the issuing department which 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 must report the distribution to the Office of Tax Compliance at the time of the distribution, and it will be responsible for all applicable taxes.  In addition, the nonresident alien recipient of the gift or gift card/certificate must contact the Office of Tax Compliance at taxoffice@drexel.edu or (215) 895-6880.

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 Accounts Payable Department 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. 

VI. SPECIAL PROCEDURE FOR CASH OR GIFT CARDS/GIFT CERTIFICATES PURCHASED FOR HUMAN SUBJECT PAYMENTS IN CONNECTION WITH SPONSORED RESEARCH ACTIVITY ONLY: 

To qualify for the special procedures defined by this section, payments to Human Subjects participating in research studies/protocols must be approved as such by the Institutional Review Board (IRB). An executed “Authorization for the Purchase of Gift Cards/Gift Certificates” (attached as Exhibit A) is required for each gift card/gift certificate purchase.  

  1. Human Subject confidential information is only collected when necessary and collection is generally not required when issuing payments of $100.00 or less.  Human Subject payments of $100.00 and under per occurrence can be processed via cash or gift cards/ certificates.  The Human Subject Voucher form (attached as Exhibit D) must accompany any distribution to human subjects of $100.00 and above.  This form is to be retained by the department. 
  2. If at any time during the course of the sponsored research study it is anticipated that the participant will receive $600.00 or more in a calendar year, then the Principal Investigator (PI)  is responsible for collecting a completed IRS Form W-9 from each U.S. Citizen or resident alien participating in the sponsored research study.
  3. If a participant in a sponsored research study is a nonresident alien, and the Principal Investigator (PI) anticipates that the participant will receive in excess of $100.00 in a calendar year, the PI must contact the Office of Tax Compliance at taxoffice@drexel.edu or 215.895.6880.  The sponsored research activity will be required to fund all applicable taxes. 
  4. Payments to human subjects having a value of $100.00 or more per occurrence for participation in a sponsored research study are not permitted in the form of gift cards/gift certificates.  Payments required in excess of $100.00 for Human Subject Payments must be made by check request and processed through Accounts Payable, with the copy of the completed Human Subject Voucher Form attached.
  5. For U.S. Citizens or Resident Aliens, an IRS Form W-9 is required for the recipient of the human subject payment to be attached to the check request.
  6. For nonresident aliens, the PI must contact the Office of Tax Compliance at taxoffice@drexel.edu or 215.895.6880.
  7. The procedures set forth in this Policy do not apply to cash or gift cards/ certificates distributed in connection with the sponsored research activity for which the Institutional Review Board (IRB) has approved a waiver of informed consent and authorization and no identifiers of the human subjects are collected.  The PI is responsible for documenting the number of human subjects and the amount of payments to those human subjects. 
  8. It is the responsibility of the PI to ensure that information collected and forwarded to the Office of Tax Compliance and/or Accounts Payable for purposes of remuneration of a human subject does not link the subject to the research study by title.  Information should be that required to complete the tax reporting form “Human Subject Voucher” and IRS Form W-9.  The forms should be treated as confidential and should be sent securely in the event the human subject payments total $600.00 or more in any calendar year.          

VII. VIOLATION OF THIS POLICY:

Violation of this policy and procedure or failure to timely cooperate in complying with its provisions by any individuals who purchase or distribute gifts or gift cards/certificates on behalf of the University 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.