Honoraria, Gifts, Awards, and Employee Fringe

Gifts:

• Non-cash gifts typically are presented as tokens of appreciation to a dignitary, guest, volunteer, or visitor when a valid and documented business purpose exists, such as to honor a distinguished visitor or lecturer. A gift is generally of nominal value, given to express appreciation or gratitude, and, ideally, bears the University’s licensed logo or is MTSU-themed.

Prizes:

• Cash or non-cash prizes are awarded in conjunction with a judged contest, competition, or drawing where the individual voluntarily initiates participation. These prizes are open to any individual who meets the event’s qualification and is sponsored by a university department or organization. The amount or value of a prize should be based upon the minimum amount reasonably required to achieve the objective of the promotion and may not exceed $500.00.

Awards:

• An award is generally given in recognition of an accomplishment, achievement, or activity that does not require the performance of a service to the University. Non-cash awards that have little intrinsic value, such as pins, medals, trophies, and plaques are NOT reportable.

Per the Internal Revenue Service (IRS), a fringe benefit is “a form of pay for the performance of services.” Any fringe benefit an employer provides is taxable and must be included in the recipient’s pay unless the law expressly excludes it. Employers typically offer fringe benefits as “in kind,” meaning they are usually paid in a medium other than cash. Under nearly all circumstances, a payment in cash will be taxable wages to the employee. Fringe benefits may include the use of automobiles or cell phones, tickets, moving expenses, or various other benefits. The taxability of a fringe benefit will depend on whether it falls within an exception and meets the requirements for excludability.

For more information on what is considered a Fringe Benefit review Policy 608: Taxability of Employee Benefits.

To report any Fringe Benefits you should attach a Taxable Fringe Reporting Form to the Purchase Authorization or Purchase Order Requisition that you submit.

Fringe benefits include any property or service provided to an employee infrequently and have a value so small that accounting for it is unreasonable and administratively impractical. Examples include occasional theater or sporting event tickets, group meals or picnics, awards and gifts (Policy 608 paragraph II)

Employees are typically only given gifts in the following cases:

• Retirement
• Bereavement

RETIREMENT

For retirement non-cash gifts and achievement awards to an employee greater than $100 and less than $400:

Complete the “Taxable Fringe Reporting Form” and attach the following:

1. Invoice & Supporting Payment Documentation
2. IRS documentation describing gift as non-taxable or include the following statement in the description “IRS Publication 5137, Fringe Benefit Guide defines De Minimis Fringe Benefits and the criteria for Awards/Prizes/Gifts to be non-taxable. For retirement and commencement speaker gifts for employees to be non-taxable, the gift must be under $400.”
3. Acknowledgment from an employee that the gift was received. Acknowledgment must include the item description, the date that the item was received, and the recipient’s signature.

BEREAVEMENT

For bereavement gifts:

• Flowers purchased for bereavement may be paid through Foundation without additional Tax Compliance review.
• Non-Flower gifts that are $100 or more require a journal entry transfer from the Foundation Index to a University Restricted index AND must be reported on the Taxable Fringe Reporting form.
• Non-Flower gifts that are less than $100 require either of the following:
  1. A tax compliance review is needed for approval to determine if a Foundation to Restricted journal transfer and Taxable Fringe Reporting form are necessary.
  2. A journal entry transfer from the Foundation Index to a University Restricted Index, and the department should complete the Taxable Fringe Reporting Form.

CLOTHING AND OTHER NON-CASH FRINGE

When providing clothing or other non-cash fringe items for faculty and staff, departments must complete the Taxable Fringe Reporting form, which is located on the Business Office Forms page.

No Taxable Fringe Reporting form is required when a department purchases clothing or non-cash items commemorating an event for MTSU business purposes. Commemorative items are typically low-dollar amounts and distributed to participants of an event. These items do not include department clothing. The clothing may include the event’s name, date, sponsors, etc.

Departments must attach the completed Taxable Fringe Reporting form to the purchase order in MT$ource. While a purchase order is preferred for all orders, departments may complete a Payment Authorization (Other Purposes not Specifically Identified) for purchases under $500.

NOTE: Traditional certificates, trophies, plaques, medals, and pins under $100 convey honorary recognition and should not be mistaken for hidden or additional compensation, which could make them taxable as fringe benefits. These honorary mementos are not usually taxable.

For non-cash gifts, prizes, or awards of $100 or more, complete the “Gifts Prizes, or Awards Recipient Information” form sections:

1. Recipient’s taxpayer information
2. Business purposes/description
3. Non-cash/other section

Attachments to form include:

1. Invoice & Supporting Payment Documentation
2. Acknowledgement from Individual that gift was received

The University does not encourage the purchase and distribution of gift cards to individuals; however, if a University business purpose requires gift cards, departments should follow the Gifts, Prizes, and Awards Policy 659. 

The Internal Revenue Service (IRS) considers gift cards and gift certificates as cash equivalents and taxable income to the recipient. Due to their cash equivalency nature, departments may not provide gift cards without prior approval by a division’s Vice President or Provost and the Vice President for Business and Finance. Adequate controls must be in place for the safekeeping and distribution of the cards. To document a gift card exchange, each card recipient must acknowledge the receipt of each card by signature. If an authorized gift card purchase and distribution will not occur within two weeks, the employee should purchase the card(s) and receive reimbursement after the distribution. Departments should purchase and distribute cards within the same fiscal year. For additional detailed guidance, please contact Accounting Services.

In order to request payment, departments should use the Gifts, Prizes, or Award Recipient Information and Payment Authorization.

Use the following form to document a recipient’s signature:

Gift Card Log – https://www.mtsu.edu/boffice/docs/GiftCard_Log.pdf.

Per Policy 664, a faculty member plans to conduct a research study and provide gift cards to participants as inducements. Whenever applicable, the IRB must approve the study. See sections below concerning how to purchase gift cards and document their distribution.

1. Cash Advance for Research Incentives via Exception Request
2. Physical Gift Cards as Research Incentives
3. Electronic Gift Cards as Research Incentives
4. Research Incentives through a Full Service Provider

Please see Policy 664 for further guidance.

In accordance with Policy 664, a faculty member plans to conduct a research study and provide gift cards to participants as inducements. Whenever applicable, the IRB must approve the study. When purchasing a high volume of gift cards, faculty may request a research advance via rule exception request through the Gifts, Prizes, and Awards Payment Authorization.

A research advance means that MTSU will issue payment directly to the faculty leader and set up a receivable associated with the leader’s MTSU account. A receivable means that the faculty leader will either owe MTSU the research advance payment or must submit receipts/documents to support the portion of the research advance issued to research participants via gift cards.

When requesting an advance, the faculty leader must list the reason in the “Payment/Vendor Description.” The leader may also attach a separate memo explaining the purpose of your advance. Since this is a special request, you should include your chain of command through the Provost’s Office and include Alan Thomas, Vice President for Business and Finance.

Research advances are special requests. When requesting or clearing an advance, the faculty leader should answer “Yes” to the question below. The “Payment/Vendor Description” must also indicate when the leader is requesting a research advance.

Upon approval, the faculty leader may purchase gift cards for the designated study.

NOTE: The faculty leader must only purchase gift cards that will be distributed for the approved study. The University does not reimburse unused gift cards or undocumented gift card distribution. See guidance concerning physical and electronic gift cards to ensure proper documentation of gift card distribution.

Faculty leaders must clear all advances by June 30th each year. Failure to properly document an advance will require exception approval and may result in the faculty leader returning all undocumented funds.

Per Policy 664, a faculty member plans to conduct a research study and provide gift cards to participants as inducements. Whenever applicable, the IRB must approve the study. Once approved, the following guidance outlines purchasing physical gift cards and documenting their distribution.

The Principal Investigator (PI) purchases gift cards and distributes gift cards to research participants. Upon distribution, the PI must complete a Payment Authorization (Gift, Prizes, or Awards Recipient Information) and include the following documentation:

• Gift Card purchase receipt
• Attach an MTSU Gift Card Log (Accessible via Firefox only) including:
  • Gift Card Serial Number
  • Amount
  • Recipient Name or Participant ID
  • Recipient Contact Information
  • Date Issued
  • Recipient Signature

NOTE: The faculty leader must only purchase gift cards that will be distributed for the approved study. The University does not reimburse unused gift cards or undocumented gift card distribution.

Per Policy 664, a faculty member plans to conduct a research study and provide gift cards to participants as inducements. Whenever applicable, the IRB must approve the study. Once approved, the following guidance outlines how to purchase electronic gift cards and document their distribution.

NOTE: The faculty leader must only purchase gift cards that will be distributed for the approved study. The University does not reimburse unused gift cards or undocumented gift card distribution.

The Principal Investigator (PI) purchases gift cards and distributes them to research participants. Upon distribution, the PI must complete a Payment Authorization (Gift, Prizes, or Awards Recipient Information) and include the following documentation:

• Gift Card purchase receipt
• Accounting Services requires the PI to utilize a vendor that tracks gift card distribution, confirming each participant’s receipt of a gift card inducement. The Office of Business and Finance does not require the use of a specific vendor; however, Amazon provides a tested solution. Accounting Services must review and approve other vendors’ electronic gift card distribution process prior to the PI’s gift card purchase to ensure compliance with Policy 664. Contact Accounting Services when using an untested vendor.
• Below is an example of an approved gift card tracking solution and supporting documentation. The PI must attach this document to the Payment Authorization (Gift, Prizes, or Awards Recipient Information), which includes the following:
  • Order details and total amount of gift card purchase
  • Individual research incentive amounts
  • Status of payment for each participant (Received or not Received). NOTE: The University only reimburses gift cards which have been distributed to participants. For the example below, “Sent Resend” means a gift card has not been received/distributed. Participants receive gift cards by adding the funds to their accounts. Please see the note encouraging participants to add the funds expeditiously. Faculty leaders may resend gift cards to participants. Once “Received”, the PI may submit for reimbursement.
  • Electronic Gift Card distribution method (Email address or phone number)

In accordance with Policy 664, a faculty member plans to conduct a research study and provide incentives to participants. Whenever applicable, the IRB must approve the study. Once approved, the following guidance outlines how to procure the services of a third-party research incentive provider.

The faculty leader enters a requisition in MTSU’s procurement system. If the service provider requires advanced payment, the Executive Director of Procurement Services must approve the payment terms. Upon requisition approval, Procurement Services releases a purchase order. NOTE: MTSU requires foreign vendors to complete a W-8 Series form prior to the purchase order release. To initiate payment to the vendor, the faculty member or assignee must create a receipt in the University’s procurement system. The service provider must send an invoice to invoice@mtsu.edu before Accounting Services can release payment. Upon receipt of invoice and faculty leader approval (receipt in MTSU’s procurement system), Accounting Services will initiate the payment and code the research incentive portion as a prepaid expense.

After services have been rendered, the faculty leader must complete the Payment Authorization (Gift, Prizes, or Awards Recipient Information) and include the following documentation:

• Note the purchase order number and “Research Incentive Advanced Payment” in the Payment/Vendor Description field.
• Attach documentation from service provider indicating the research incentive amounts and dates distributed. If any research incentives were not distributed to participants, the faculty leader must arrange for the vendor to refund the unused research incentive amount directly to MTSU. For assistance with the refund, please contact Accounting Services. Faculty leaders must clear all research incentive advanced payments by June 30th each year. Failure to properly document the advanced payment will require exception approval and may result in the faculty leader returning all undocumented funds.

Departments may not use University funds to purchase gift cards for employees. The Foundation has authorized the purchase of gift cards for student employees and retirees. For additional guidance concerning this process, please see the “Cash Awards to Employees” procedure.