Chapter 38 – Taxation of Gifts, Prizes, and Awards to Employees

(10/13; 2/15; 7/1/17; 5/18; 2/19; 9/7/21)

38.1 General

(Amended 7/1/17)

As with all purchases utilizing University funds, expenditures for awards, gifts, and celebrations must be in accordance with federal and state laws, grant restrictions, and University policies and procedures. Departments must be aware of tax implications and limitations before awarding employees.

38.2 (Reserved for future use)

38.3 Exceptions for Length-of-Service, Retirement, and Safety Awards

(Amended 2/15)
  1. Length-of-service and retirement awards. A non-cash length-of-service award or a retirement award may qualify as a non-taxable benefit provided all of the following requirements are met: 
    1.  the employee has at least five years of service with the University,
    2. the employee has not received a length-of-service award within the last five years other than a de minimis non-cash award valued at less than $100, and 
    3. the awards are presented as part of a meaningful ceremony and should not be determined based on an employee's classification. 
    The amount of the award should be reasonable and in no instance should it exceed $1,600. 
  2. Safety achievement award. Safety achievement awards that recognize an employee's accomplishments for maintaining or promoting defined safety standards may qualify for exclusion from taxation provided all of the following requirements are met:
    1. the award is limited annually to less than 10 percent of total eligible employees,
    2. the award is not presented to managers, administrators, clerical, or professional employees, and 
    3. the awards are presented as part of a meaningful ceremony.

38.4 Appropriate Funding Sources

Funding for gifts, prizes, and awards should be evaluated based on the department's current budget, the type of expenditure, and justification for the purchase. Non-general education fund resources are preferable, and departments should refer to Sponsoring Agency restrictions to ensure it is allocable and allowable before funding from grant sources.