Employee Gifts: Updated Policy
Administrative Guide Memo 2.2.10: Gifts and Awards for University Employees, which provides guidelines for gifts or awards for eligible university employees, was updated on July 20, 2023. The update aligns with IRS guidelines and is in keeping with the current cost of goods. This change makes permanent the interim policy that was in place during the pandemic.
What does non-taxable limit mean?
Depending on the rationale for the gift and the type of gift, taxability varies.
- Each calendar year, employee gift values of certain types must remain below non-taxable thresholds or they are subject to taxation. Tax and shipping costs are excluded from the thresholds. These thresholds vary by the purpose of the gift:
- Occasional gifts
- To commemorate a holiday or event
- Tangible gifts with a value over $100 will be taxable at the total gift value.
- To give in sympathy or bereavement
- Tangible gifts have a non-taxable threshold of $100.
- Note that sympathy or bereavement gifts are considered a separate type of occasional gift and their non-taxable threshold is also $100 per year.
- To commemorate a holiday or event
- Service milestone gifts
- To acknowledge years of service.
- Service milestone gifts are provided through UHR’s Stanford Celebrates You program and are administered in increments of five years of service and within the non-taxable limit of $400.
- Employees not participating in this program may receive gifts up to the non-taxable limit of $400. Gifts must still be administered in increments of five years of service and with amounts commensurate with years of service.
- Gifts given in addition to a gift issued through the Stanford Celebrates You program are taxable to the recipient.
- To acknowledge years of service.
- Retirement gifts
- Retirement gifts may be provided to employees by departments and are similar to service milestone gifts in that the value should be commensurate with years of service.
- Tangible gift values over the $400 threshold will be taxable at the value over the threshold (amount above $400).
- Gift cards for any amount are taxable.
- Occasional gifts
- Gift cards provided to individuals in order to purchase a business meal or a meal for an employee morale event, for which there is a valid university business purpose, are not taxable to the recipient.
What changed on July 20?
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Changed: Non-taxable limit for other occasional gifts (tangible) |
Occasional employee morale gifts are used for occasions unrelated to performance recognition, such as for holidays or to commemorate a department event. During the pandemic, the non-taxable limit for tangible gifts was increased from $50 to $100. This change is now permanent. If the tangible gift exceeds the threshold of $100, the entire amount becomes taxable. For example:
Note: Sympathy or bereavement gifts are considered a separate type of occasional gift and their value does not get aggregated into the total.
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Clarified: Taxability of any gift cards, gift certificates, and cash gifts for both occasional and service/milestone gifts |
To align with IRS guidelines, it was clarified that all gift cards are taxable for the full value when provided as gifts, regardless if they are under taxable thresholds for tangible gifts because they are considered cash equivalent. For example:
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What did not change?
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Not changed: Non-taxable limit for service milestone/retirement gifts |
For all types of gifts, departments are strongly encouraged to consider purchases of Stanford-branded merchandise or tangible items as opposed to gift cards. Gift cards have additional tax considerations. The non-taxable limit for tangible gifts provided to acknowledge years of service is $400 a year, and the amount should be commensurate with years of service. For this type of gift, only the amount over the taxable limit is taxable. Retirement gifts may be provided to employees by departments and are similar to service milestone gifts in that the value should be commensurate with years of service. Tangible gift values over the $400 threshold will be taxable at the value over the threshold (amount above $400). For example:
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Not changed: Gift cards provided for business meals or morale are not taxable to the recipient |
When purchasing gift cards/certificates for a business meal or employee morale event meal, regardless of purchase method, use one of the appropriate expenditure types:
The meal gift card is not taxable if there is a business purpose for the meal gift card or if the meal gift card is part of an employee morale event and the remote employee is participating virtually in the event. For example:
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How should gifts be tracked and reported?
The framework for managing financial risk includes clear identification of roles and responsibilities, appropriate internal controls to mitigate risk, and guidelines for processes that support best practices. Managing financial risk is an essential component of financial stewardship to appropriately mitigate risks in order to protect Stanford University's financial assets, including using funds to purchase and expense for employee gifts.
When a gift is provided to an employee, the following steps should occur to ensure appropriate tracking and tax reporting.
The employee’s name, employee ID, and occasion for the gift are to be included in the transaction to allow for the value to be tax reported to the employee. Once a reimbursement has been processed, the taxable transaction will be reported to payroll and associated FICA (OASDI and MED) taxes will be deducted from the employee’s upcoming paycheck.
- In the PCard module, this is done by completing the Business Purpose fields. See How To: Verify Pcard Transactions.
- In the Expense Requests system (ERS):
- For expense reimbursements this is done by completing the Beneficiary section with recipient information. Beneficiaries are then selected from the drop down list in the Gift Recipients section of the transaction line details. Learn more about Beneficiaries in ERS.
- For Non-PO payments this is done by completing the Individuals (on whose behalf) section with recipient information.
| Purpose of Gift: | Service milestone or retirement | Occasional (i.e., holiday gift) | ||
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| Purchasing method | Steps for a tangible gift | Steps for a gift card | Steps for a tangible gift | Steps for a gift card |
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If a gift is purchased with a PCard. |
Use expenditure type 52240 Employee Morale for a tangible gift that is up to $400. - Or - Use 52210 Employee Gifts Taxable for any tangible gift provided in addition to a Stanford Celebrates You program gift. Tax note: Any portion of the gift over $400 is taxable and appears on the employee’s paycheck. |
For purchases of gift cards of a total amount $4,999 or less, use a PCard. Use expenditure type 52210 Employee Gifts Taxable. Tax note: Gift cards for any amount are 100% taxable. |
Use expenditure type 52240 Employee Morale for tangible gifts that are up to $100. - Or - Use 52210 Employee Gifts Taxable for any tangible gift over $100. |
For purchases of gift cards of a total amount $4,999 or less, use a PCard. Use expenditure type 52210 Employee Gifts Taxable for gift cards in any amount. Tax note: Gift cards for any amount are taxable. |
| If gift purchased through personal funds and then reimbursed (ERS - Expense Report) |
Use expense type Gifts or Gifts - Foreign Activity Then use expenditure Type 52240 Employee Morale for tangible gifts that are up to $400. - Or - Use expenditure type 52210 Employee Gifts Taxable for any tangible gift amount over $400.
Tax note: Any portion of the gift over $400 is tax reported and appears on the employee’s paycheck. |
Use expense type Gift Cards - Employee or Gift Cards - Employee (Foreign) Then use expenditure type 52210 Employee Gifts Taxable.
Tax note: Gift cards for any amount are taxable. |
Use expense type Gifts or Gifts - Foreign Activity Then use expenditure type 52240 Employee Morale for tangible gifts that are up to $100. - Or - Use expenditure type 52210 Employee Gifts Taxable for any tangible gift over $100.
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Use expense type Gift Cards - Employee or Gift Cards - Employee (Foreign) Then use expenditure type 52210 Employee Gifts Taxable for gift cards in any amount
Tax note: Gift cards for any amount are taxable. |
| Pay a vendor directly with a Payment Request (ERS - Non-PO Payment) |
Use category “Special Request” and expense type “Special Request”. Use expenditure type 52240 Employee Morale for the portion of the gift that is up to $400.
Use 52210 Employee Gifts Taxable for any amount over $400. Tax note: Any portion of the gift over $400 is taxable and appears on the employee’s paycheck. |
Use category “Special Request” and expense type “Special Request”. Use expenditure type 52210 Employee Gifts Taxable.
Tax note: Gift cards for any amount are 100% taxable. |
Use category “Special Request” and expense type “Special Request”. Use expenditure type 52240 Employee Morale for tangible gifts that are up to $100.
Use 52210 Employee Gifts Taxable for any gift over $100.
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Use category “Special Request” and expense type “Special Request” Use expenditure type 52210 Employee Gifts Taxable for gift cards in any amount
Use 52210 Employee Gifts Taxable for gift cards in any amount Tax note: Gift cards for any amount are taxable. |
| Purchase orders can be used for gift card purchases for research and human subject studies, but are not recommended for employee gifts. Bulk purchases of gift cards for employees are highly discouraged. If a bulk purchase for employee gift cards are still required, those may be purchased with a PCard. Please note that each gift card must have an intended recipient, each card should be distributed to its intended recipient shortly after purchase, and the recipient’s information must be included with the transaction. | ||||
Note: Gift cards to students and vendors are not covered under this policy and are subject to additional reporting requirements on part of the recipient, and therefore highly discouraged. Please consider gifting Stanford-branded merchandise of nominal value instead.
Resources
- For policy information, see the Administrative Guide Memo 2.2.10: Gifts and Awards for University Employees.
- Learn more about employee gifts on Topic Overview: Categories of Purchases for high level guidance.
- For the definitions of expenditure types, see Resource: Commonly Used Expenditure Types.
- To learn about meal expenses, see Resource: Meal Expenditure Types.
- Visit the Buy and Pay Guide which represents a list of goods and services, best purchasing methods and related expenditure types.
Support
- For gifts in recognition of performance, see Cardinal at Work.
- For assistance, submit a support request.
