Purchase and Distribution of Gift Cards
What University policies govern the purchase and distribution of gift and bank cards?
Can gift cards be purchased using a ProCard?
No, gift cards should be purchased through the Controller’s Office Swift Prepaid Gift Card process. Gift card purchases are a restricted purchase of the ProCard.
How do I handle gift cards distributed to employees?
- Employees as Research Study Participants:
Employees who participate in research studies are treated the same as non-employees and are subject to all of the reporting requirements to which non-employees are subject. (i.e. these amounts could be reported on a 1099-misc form)
- Employees receiving gifts or awards:
Employees who receive gift cards as an award or gift will have the amount of the gift card added to their form W-2 for all amounts.
Do I need to collect W-9s for all recipients of gift cards?
No. All payee personal information is entered directly into the Swift Prepaid Solutions system.
When will a recipient receive a form 1099?
Non-employee gift card recipients receive a form 1099-misc. from the University when all non-employee payments from the University are equal to or greater than $600 for the calendar year. This includes employees who receive non-employee compensation for their participation in research studies that is equal to greater than $600 in a calendar year.
Why do I need to collect tax information from non-employee recipients that are receiving less than $600 in gift cards?
- Obtaining a payee name and tax ID number (i.e. social security number) provides a measure of assurance that an individual is authorized to receive compensation.
- Complete payee data provides a record of account to assist in the internal auditing of gift card distributions.
- Complete payee information provides data that may be relied upon by the IRS during an examination to confirm that the University appropriately prepared forms 1099 when applicable.
- Complete payee information provides an official name of record (SSN) for the recipient in order for the Controller’s Office to determine if multiple departments are distributing gift cards to the same individual, and if, in total, this individual received compensation that exceeds the $600 threshold causing the distributions to be reportable to the IRS.
How do I order and load cards?
Training is required to gain access to the Swift system. We schedule monthly training sessions and send the dates out to all UBM's in advance. Once you have attended training you will be granted access to the Swift system and you can order cards.
If I have issues with the Swift system, what should I do?
If you are unable to reset your access from the Swift system please send an e-mail for assistance. we have access to all active users and can make updates as needed.
Can a gift card be given to a foreign individual?
No, social security number is required for all gift card recipients. Please see Payments to Individuals.
What Internal Revenue Code and Regulations govern the distribution of gift cards?
Only specifically excluded items can be excluded from gross income. Internal Revenue Code Section 132 (a) lists the fringe benefits that can be excluded.
The IRS has given additional guidance with Treasury Regulation,§1.132-6 (c), specifically addressing gift cards as a form of compensation not excludable under section 132 of the Internal Revenue Code.
The IRS has further reinforced this position with Technical Advice Memorandum 200437030.