I. Justification and Statement of Policy

This policy is implemented to ensure compliance with the tax withholding and reporting obligations of both the Internal Revenue Service (IRS) and the Commonwealth of Pennsylvania. Under Internal Revenue Code Section 132, a gift card, gift certificate, store-value card or a prepaid credit card, collectively referred to as a gift card, is considered a cash equivalent that is subject to tax regardless of the face value. The value of gift cards given to students and non-employees is taxable and reportable income on IRS form 1099-MISC if the value of gift cards received aggregates to an amount of $600 or more per calendar year. In addition, gift cards can be susceptible to fraud or misappropriation because they lack the audit trail that exists with a check or other forms of payment. This policy outlines the policy related to the purchase of gift cards, gift certificates, and other cash equivalent gifts, and the tax implications to the recipient.

II. Scope

This policy applies to all employees and students. It also applies to every employee or individual who reviews, approves, or records financial transactions on behalf of the College.

III. Definitions

1. De Minimis: A non-cash gift/prize/incentive is considered de minimis if it is so small that accounting for the items would be considered unreasonable or administratively impractical. De minimis gifts/prizes/incentives are only provided on an occasional basis. Non-cash gifts/prizes/incentives with a value of less than $50 will be considered de minimis. Cash and cash equivalents are never considered de minimis.

2. Cash Equivalents: Cash equivalents include, but are not limited to, cash, gift cards, gift certificates, gift vouchers, and prepaid debit/credit cards with face value. 

3. Gift Card: A preloaded debit card or certificate that allows the cardholder to use it for the purchase of goods or services at either a specific retailer or anywhere that accepts major credit cards.

4. Senior Officer: For purposes of this policy, the President or Divisional leaders of the College who report directly to the President.

5. Human Subjects Research:  A systematic investigation, including development, testing, and evaluation, designed to develop or contribute to generalizable knowledge that includes live human participants/respondents. Please see F&M's Human Subjects Policy for more information.

IV. Policy

1. General Provisions:
   

   • Individual gift cards may not have a face value greater than $50.  

   • Gift cards or other cash equivalents must be purchased through the Diplomart gift card process. Gift cards or other cash equivalents cannot be purchased using College Purchasing Cards (PCard), nor will the College reimburse employees who purchase gift cards using personal funds. 

   • A request to purchase gift cards/cash equivalents must be approved by a Senior Officer. If approved, the gift card/cash equivalent will be purchased by the Purchasing team.

   • Bookstore gift certificates are not allowed to be purchased.

   • Gift cards/cash equivalents should not be purchased using Federal, State, City or other types of grant or endowment funds unless the terms and conditions of the grant or endowment permit such purchase.   

   • Gift cards cannot be purchased as gifts for employees or students, both current and graduating, as these payments may be considered income when determining a student's financial aid package and have an impact on other need-based financial aid the student may receive.

   • Exceptions to the general provisions must be approved by the Controller’s Office.

2. Gift Cards/Cash Equivalents to Employees
   Gift cards/cash equivalents to employees, including student employees, are prohibited for work-related activities (e.g., bonuses, incentives, rewards, etc.). Requests for any special type of employee recognition must be approved by Human Resources and paid via College payroll. There is no minimum dollar amount for this rule.

3.         Gift Cards/Cash Equivalents to Non-Employees
           The provision of gift cards/cash equivalents to College suppliers, consultants and speakers are prohibited.
   
   
4.        Gift Cards/Cash Equivalents as College Giveaways to Students       
          Gift cards/cash equivalents purchased with College funds and provided to students as a method of increasing participation in a student program,                  survey, event, or contest are allowable subject to the general provisions noted above.
   
   
5.         Gift Cards/Cash Equivalents as College Giveaways to FPS Employees
            Gift cards/cash equivalents purchased with College funds and given to FPS (non-student) employees during an employee recognition event such as           Dipnic or the holiday party are considered taxable income to the employee. The recipients of these gift cards must be shared with Payroll to add to             their Form W-2 in the year the gift card is received. There is no minimum dollar amount for this rule.
   
6.         Human Subjects Research

           The use of gift card/cash equivalents for human subjects research purposes must be approved by IRB or, in the case of student research, its                               designee in accordance with the IRB manual. To minimize the likelihood of exceeding federal regulations, the following rules apply: 

• • Details on payments and recording of disbursements must be described in the IRB protocol and approved by IRB.

  • Each research protocol is permitted to compensate participants up to $50 per payment. Exceptions to this amount must be approved by IRB, in consultation with the Controller’s Office.

  • If a single participant receives more than $300 from a single researcher’s protocol (i.e. longitudinal studies) in a single calendar year, the researcher must collect a W9 (US resident)/W8(non-US resident) form from the participant.

  • If current students or employees of the College satisfy the requirements of a study, in a non-work-related role, they may participate in human subjects research and receive a gift card as an incentive payment.  However, employee participation must not interfere or conflict with their College work responsibilities and the amount of the gift card must be consistent with that provided to non-employees. Employee participation may not be a requirement of their employment.

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Policy Maintained by: Finance and Administration, Associate Vice President of Finance & Controller
Original Effective Date:  March 4, 2024