Accounts Payable provides guidelines for following University policies.
General Guidelines for the Purchase of Food from University Funds
The following guidelines do not apply to candidate meals or meals associated with travel. Refer to Travel Policy or Section B.25 of the University Handbook.
University funds may be used to purchase food in accordance with the University Hospitality Policy. Food provided to employees, however, is generally considered to be taxable income as defined by the Internal Revenue Service unless certain conditions are met. (Reference IRS Publication 15-B and IRS Publication 463.)
Examples of activities that are allowable without tax consequences include:
Examples of activities that are allowable, but taxable include:
Examples of activities that are not allowable and will not be paid or reimbursed by the University include:
*Alternative funding sources, such as the USI Foundation, may be available for certain expenses not allowed from University funds. Departments should coordinate the payment of such expenses in advance with the Foundation.
Purchase of Gifts, Prizes, Awards, and Giveaways
Payments to individuals for services, appreciation, recognition, prizes, and awards are considered taxable income to the recipient. The amount of the payment will be subject to tax withholding and reported to HR for inclusion on Form W-2 for employees or reported on Form 1099-MISC if the recipient is not an employee of the University.
These types of payments must only be made directly to the individual from the University (via Accounts Payable or Payroll via Purchasing Card, check or direct deposit) to ensure compliance with Internal Revenue Service (IRS) requirements. Payments made by third parties to individuals for services, prizes, awards, gifts, or giveaways are not permitted and will not be reimbursed by the University.
Form W9 (Request for Taxpayer Identification Number and Certification), or a University ID number for employees/students, must be submitted to the Accounts Payable department for any gift, prize, award, or giveaway provided by the University as outlined in Cash Equivalents and Non-Cash Awards to comply with tax reporting regulations.
If a gift, prize, award, or giveaway is distributed to an ineligible recipient or Form W9, or University ID number, is not provided to the Accounts Payable Department, the purchase will be considered a gift from the individual instead of the University, and therefore cannot be purchased or reimbursed by the University. (University Handbook)
Cash Equivalents
The IRS specifically defines gift certificates, gift cards, and any financial instruments redeemable for cash as cash equivalents and states that the value of these items is considered taxable income to the recipient regardless of dollar value. (IRC §274(j)(3)(A); Reg. §1.132-6)
Non-Cash Awards
Non-cash gifts, awards, prizes and giveaways are also considered taxable income and reported at the fair market value of the item. If the unit cost of an item is less than $50, then it will be considered de minimis*** and excluded from reporting.
Apparel for Employees (IRS Publication 5138)
This chart summarizes the University’s tax reporting requirements and information required for such purchases:
Payment Type |
Recipient |
Dollar limits |
Information required |
Gift Card/Certificates and other Cash Equivalents |
Non-Employee |
Must be reported regardless of dollar value |
|
Gift Card/Certificates and other Cash Equivalents |
Employee and Students |
Must be reported regardless of dollar value |
Names and University ID numbers attached to payment documentation |
Non-cash Gifts, Awards, Prizes, Giveaways, etc. |
Non-Employee |
Report when total expense is greater than or equal to $50.**
If total expense is $49.99 or less, it will be considered de minimis*** and excluded from reporting. |
|
Non-cash Gifts, Awards, Prizes, Giveaways, etc. |
Employee and Students |
Report when total expense is greater than or equal to $50.**
If total expense is $49.99 or less, it will be considered de minimis*** and excluded from reporting. |
Names and University ID numbers attached to payment documentation if over dollar limit |
Apparel |
Employee |
Must be reported regardless of dollar value |
Names and University ID numbers attached to payment documentation |
Apparel |
Non-Employee and Students |
Report when total expense is greater than or equal to $50.**
If total expense is $49.99 or less, it will be considered de minimis*** and excluded from reporting. |
Names and University ID numbers attached to payment documentation |
*Note: Form W9 may only be submitted by a U.S. citizen or other U.S. person as defined by the IRS. If an individual does not meet that criteria, then he or she should not fill out Form W9 and must not receive any cash equivalent from the University until tax ramifications have been researched and the disbursement has been approved by Accounts Payable.
**Recipient information is not required for the purchase of plaques because they cannot be easily converted or otherwise used to benefit the individual(s) in a material or quantifiable way.
***De minimis - must be infrequent AND of minimal value (IRC §132(e); IRC §274(j)(3)(A); Reg. §1.132-6)