Nov. 1, 2011
Mar. 6, 2012
Awards are given to recognize a person or group, including companies, student groups, universities and other organizations, for their merits or contributions to The University of Texas at Austin.
IRS requirements and restrictions for awards are as follows:
Cash (monetary) awards to employees for any amount must be processed through Payroll Services. Departmental awards for employees must be approved in advance by the dean or vice president of the awarding college or department and submitted to Payroll Services. Award program approval letters sent to deans and vice presidents must contain signature approval and include the following information: award name, selection criteria, frequency, amount per award, and account number(s).
Gift certificates and gift cards for any amount are disallowed for employees. These items are taxable to the recipient, and it is administratively infeasible to assess and collect the required taxes and fringe benefits.
Employee merchandise awards exceeding a fair market value of $50 must be included in the employee’s taxable income, unless the award is for length of service or for safety achievements. The value is determined by purchase price unless the item has been personalized (inscribed), which will make the fair market value zero. Merchandise awards in excess of $400 given for length of service or for safety achievements must be included in the employee’s taxable income. Length of service or safety achievements awards must also be awarded as part of a meaningful presentation, and awarded under circumstances that do not indicate that the payment is disguised compensation. Employee’s UT EID must be included with the payment document that is sent to The Office of Accounting for approval.
The Procard may be used to purchase merchandise awards for employees if preferred. Departments must provide a list of amounts and employee UT EIDs to Payroll Services if award is over the $50 fair market de minimus amount or is not a length of service or safety achievement award.
Athletics-related employee merchandise awards that exceed fair market value of $50 are monitored by the Athletics Business Office and reported annually to Payroll Services to be included in the employee’s W-2.
The value is determined by purchase price unless the item has been personalized (inscribed), which will make the fair market value zero.
Award recipients must provide their permanent mailing address and Social Security number for issuance of 1099-MISC form for awards that exceed a fair market value of $50. This information must be included with the payment document that is sent to The Office of Accounting for approval.
The Procard may be used to purchase gift card/gift certificate awards and merchandise awards for non-employees if preferred. Departments must provide award recipients’ permanent mailing address and Social Security number, VP7 document ID, and award amount to The Office of Accounting, Contractor Services (campus mail code K5300) if award is over the $50 fair market de minimus amount.
Departments must keep a log of cash awards and gift card/gift certificate awards, regardless of amount or method of payment, which includes the awardees name, explanation of award, and the VP document number.
Awards presented outside the United States to non-US citizens/residents are not reportable, and no tax information is required.
Athletics-related non-employee and student awards that exceed fair market value of $50 are monitored by the Athletics Business Office and reported annually to The Office of Accounting if awards collectively total $600 or more.
A gift certificate/gift card can only be awarded to a student who is also an employee if the gift certificate/gift card is awarded based on their role as a student, and it must be awarded in accordance with the non-employee policy (see section B.2 of this policy). Gift certificates and gift cards are disallowed for student employees if the award is based on their role as an employee.
Code 1527—Awards-Employees (Non-cash)
Cost of non-cash awards for employees. Awards of cash to employees must be processed through Payroll Services. Gift certificates and gift cards for any amount are disallowed for employees.
Code 1528—Awards-Non-Employees (Cash and Non-cash)
Cost of awards to non-employees. Social Security number and permanent mailing address must be reported for gift certificates/gift cards and merchandise awards in excess of $50 for non-employees for issuance of 1099-MISC form.
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