Effective Date                    July 1, 2022

Last Revised                       July 1, 2022

Review Date                       July 1, 2025

Responsible Party            Financial Services

I. Introduction and Purpose

These procedures are implemented to ensure compliance with State and Federal laws and regulations. To ensure compliance with these requirements, employees must adhere to the following policies and applicable procedures outlined in the Business Procedures Manual.

This section establishes procedures related to awards and other gifts presented on behalf of the University, including funding and tax implications of such gifts. Award and gift recipients covered in this section include faculty, staff, students and non-employees.

II. Procedures

  1. Determining applicability
    1. Department Heads, Deans, and VPs authorized to approve gifts or awards must determine that the item is directly related to an objective of the unit and evaluate the importance of the purchase in terms of cost versus benefits and alternatives that would be equally effective.
    2. It is understood that MSU business requires some gift or award expenditures. However, in all cases, in addition to compliance with procurement and expenditure policies, there must be a legitimate and documented business purpose for the expenditure that indicates a benefit to the University.
    3. Payments or gifts not covered by these procedures:
      1. De minimis non-cash, non-gift card or certificate items that are $25 or less, such as pens, cups, posters, T-shirts, etc., that are given for the purpose of marketing or recruiting prospective students are considered ordinary business expenses and are not included in these procedures.
      2. Employment-based, performance payments. These must be paid through UHR Payroll.
      3. Payments for services provided to the University by non-employees.
      4. Payments to research subjects. These are payments for services.
  2. General Requirements
    1. Typically, gifts and awards should only be given for MSU-sanctioned programming such as Employee Excellence Awards and length of service awards.
    2. Awards or gifts presented on behalf of the university outside of an MSU-sanctioned program must be approved at the Associate Vice President or Dean level.
    3. Gifts and awards are limited to an equivalent value of $75 or less per qualifying event. Gift expenditures over $75 may be approved by the President or the appropriate Vice President.
    4. Due to IRS requirements, MSU-sanctioned award programs are limited to non-cash awards of $1,600 annually per recipient and awards for non-sanctioned programming are limited to $400 annually per recipient. Cash or cash equivalent awards and gifts for employees, no matter the value, are always taxable.
    5. Cash and non-cash awards and gifts are subject to Federal and State taxes and may be reportable on Form W-2 (employees), Form 1099-MISC (non-employees), or Form 1042-S (nonresident aliens). Consult with UBS to determine applicability.
    6. The purchase and the reimbursement for a gift or award must be handled through an approved payment processing method with a valid business purpose and supporting documentation.
    7. Gifts or awards allowable under these procedures cannot be purchased or reimbursed with sponsored program funds.
    8. Unallowable gifts include those to honor individuals for personal, non-work-related achievements or events such as birthdays, holidays, Administrative Professional’s Day, weddings, baby showers, housewarming, termination of employment that is not retirement, etc.
    9. Documentation for awards and gifts should be maintained within the unit to support distribution of the awards and gifts in the event of an audit or review unless, considering the de minimis nature where the value and the frequency with which the gifts are provided are so small as to make accounting for them unreasonable or impractical.
    10. Units giving awards or gifts are responsible for communicating with the UBS Accounts Payable and the UHR Payroll offices when an award or gift is reportable.
  3. Non-Cash Gifts, Awards and Prizes
    1. Tangible personal property
      1. Occasionally, units may provide tangible personal property as prizes and other gifts to encourage employee participation in an event or as an incentive to complete a survey or a questionnaire.
      2. Tangible personal property generally refers to non-cash personal property that can be physically relocated and excludes real property (e.g., land, building). Examples of tangible personal property include, but are not limited to, flowers, candy, fruit, MSU logo items, memento items, books, pens, pennants, plaques, or similar items.
      3. Tangible personal property does not include cash, cash equivalents, gift cards, gift coupons, most gift certificates, vacations, meals, lodging, tickets to theater or sporting events, stocks, bonds, other securities, or similar items.
    2. Gift Certificates for tangible personal property
      1. Non-transferable gift certificates for tangible personal property are the only types of gift certificates that qualify as non-cash awards for purposes of allowable awards set forth in this section.
      2. Tangible personal property gift certificates must confer only the right to select and receive tangible personal property from items pre-selected or pre-approved by the University. Such gift certificates may not be redeemed for cash or provide cash for the difference between the purchase price and the value of the gift certificate.
  4. Cash and Cash Equivalent Gifts, Awards and Prizes
    1. Gifts of these types, to include gift certificates that do not meet the criteria in II.C.2 and gift cards, are always considered cash, per Federal tax law.
    2. Cash or cash equivalent awards and gifts for employees, no matter the value, are reportable to the IRS by the UHR Payroll office.
    3. Cash or cash equivalent awards and gifts for non-employees that total more than $600 annually are reportable to the IRS by UBS Accounts Payable.
    4. Go to the Expenditures – Gift Cards, Gift Certificates & Cash Disbursements section for details.
  5. Employee Award and Gift Considerations
    1. Length of Service Awards
      1. University-wide recognition program for employees celebrating milestone anniversaries beginning at 5 years of service, and continuing at 5-year increments, is administered by the Office of the President.
      2. Non-cash or cash equivalent awards given under this program meet the specific requirements of the Internal Revenue Code (IRC) to qualify as achievement awards that are non-taxable to the employee.
      3. Awards or gifts to individuals by departments using University or sponsored program funds for length of service are not allowed.
    2. Retirement Gifts
      1. Retirement gifts for individuals who have at least 5 years of service to MSU may be approved by the appropriate Associate Vice President or Dean.
      2. Sponsored program or Facilities & Administration (F&A) funding may not be used for these expenses.
      3. It is recommended that retirement gifts be in the form of tangible personal property.
      4. Under IRC Section 132(e) an employer may give a tangible personal property retirement gift of nominal value on a tax-free basis. The University has established its nominal value to be $75 or less.
      5. If a retirement gift is given in the form of cash, check, gift card or gift certificate, the entire value of the gift is additional wages subject to tax withholding regardless of the cost or value.
    3. Sympathy Gifts
      1. Gifts of tangible personal property may be presented as an expression of sympathy, for example, in the event of the death of an employee or a member of the employee’s immediate family or household.
      2. Gifts of this nature must be approved by the appropriate Associate Vice President or Dean.
      3. Sympathy gifts of tangible personal property should be limited to items such as flowers, plant arrangements, and gift baskets.
  6. Student Award and Gift Considerations
    1. Gifts of tangible personal property may be given to students for academic or other University achievement, recognition, or competition, or as part of campus student-life events.
    2. Gifts of cash or cash equivalents are not allowed. Gift cards are not acceptable.
    3. Gifts given to students may impact the student’s financial aid package and/or NCAA eligibility for student-athletes. Please consult with Financial Aid and/or University Athletics prior to making the award available to the student.
    4. Expenditures for gifts given to students must be properly substantiated with appropriate documentation with the Chrome River expense report or BPA.
  7. Non-Employee Award and Gift Considerations
    1. Non-employee awards and gifts are gifts given to recipients such as donors, potential donors, visiting dignitaries and scholars, volunteers, community members, elected and appointed officials, students, and research participants, and may include the following:
      1. An award for promotional and goodwill gifts
      2. Gifts presented as a token of appreciation for, or in recognition of, service to the University
      3. Gifts presented for meritorious academic achievement
      4. Gifts offered as an expression of sympathy or congratulations
      5. Gifts of cash or cash equivalents are not allowed--gift cards are not acceptable
    2. Such gifts must be approved by the appropriate Associate Vice President or Dean. Gift expenditures over $75 must be approved by the President or the appropriate Vice President. The authorization must be documented and accompany the Chrome River expense report or BPA.
  8. Dual Status as Employee and Other Status
    1. If the gift recipient has a status as both a non-employee (such as a student or volunteer) and an employee, a determination must be made as to whether the presentation of the gift is dependent on the individual’s employment relationship with the University.
    2. If the gift is not in any way dependent on the recipient being employed by the University, the gift will be treated as a non-employee transaction.
    3. If the gift relates to the employee’s employment with the University, the gift will be treated as an employee gift.

III. Definitions

  1. A student is any currently enrolled individual who holds temporary, part-time, full-time, undergraduate and/or graduate status.