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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.
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 included 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 by check or direct deposit) to ensure compliance with Internal Revenue Service requirements. Payments made by third parties to individuals by cash or check for services, prizes, awards, gifts, or giveaways are not permitted and will not be reimbursed by the University.
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. (Reference IRS Publication 15-B and Internal Revenue Code 274 (e)(3)(B).)
For the University to comply with tax reporting regulations, it is required that a completed Form W-9 (Request for Taxpayer Identification Number and Certification) must be submitted to the Accounts Payable Department for any cash equivalent provided by the University to non-employees. The University ID number must be provided in place of Form W-9 for employees receiving cash equivalents.
If a cash equivalent is distributed to an ineligible recipient or Form W-9 is not provided to the Accounts Payable Department for non-employee recipients, the purchase will be considered to be a gift from the individual, and therefore it cannot be purchased or reimbursed by the University. (Reference University Handbook item F.26.)
Non-cash Awards
Non-cash gifts, awards, prizes, and giveaways are also considered to be taxable income and reported at their fair market value. The requirement listed above for a completed Form W-9 for non-employees or University ID number for employees also applies to these purchases. If the unit cost of an item is less than $50, then it will be considered de minimis and excluded from reporting.
University of Southern Indiana Bookstore gift certificates are classified as non-cash awards. They are considered tangible goods since the recipient receives a good such as University logo apparel. The requirement listed above for a completed Form W-9 for non-employees or University ID number for employees also applies to these purchases. For non-employees, if the certificate is less than $75, then it will be considered de minimis and excluded from reporting. Certificates for employees or above $75 require reporting.
This chart summarizes the University’s tax reporting requirements and information required for such purchases:
Payment type |
Dollar limits |
Information required |
Gift certificates and other cash equivalents (To non-employees) |
Must be reported regardless of dollar value (excludes Bookstore gift certificate per guideline listed above) |
Form W-9* attached to payment documentation |
Gift certificates and other cash equivalents (To employees & students) |
Must be reported regardless of dollar value
|
Names and University ID numbers attached to payment documentation |
USI Bookstore gift certificate (To non-employees)
|
Report when unit price is greater than or equal to $75.**
(Unit price = total cost/quantity)
If the unit price is $74.99 or less, it will be considered de minimis and excluded from reporting. |
Form W-9* attached to payment documentation |
Non-cash gifts, awards, prizes, giveaways, etc. (To non-employees) |
Report when unit price is greater than or equal to $50.**
(Unit price = total cost/quantity)
If the unit price is $49.99 or less, it will be considered de minimis and excluded from reporting. |
Form W-9* attached to payment documentation |
Non-cash gifts, awards, prizes, giveaways, etc. (To employees & students) |
Report when unit price is greater than or equal to $50.**
(Unit price = total cost/quantity)
If the unit price 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
|
Employee apparel |
Must be reported regardless of dollar value |
Names and University ID numbers attached to payment documentation |
*Note: Form W-9 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 criterion, then he or she should not fill out Form W-9 and must not receive any cash equivalent from the University until tax ramifications have been researched and the disbursement has been approved by the accounts payable and payroll departments.
** Recipient information is not required for the purchase of plaques because they cannot be easily converted or otherwise used to benefit the individuals in a material or quantifiable way.