1.0 Policy Purpose
This policy states the circumstances under which Gift Cards may be purchased and distributed, as well as the tax implications for recipients.
2.0 To Whom the Policy Applies
This policy applies to all Brown University faculty, staff and students.
3.0 Policy Statement
Gift Cards, regardless of value, are considered cash equivalents by the Internal Revenue Service (IRS) and are subject to tax reporting. Anyone purchasing Gift Cards for distribution using University funds is responsible for compliance with IRS regulations and University policies.
Individual Gift Cards may not have a face value greater than $100 without prior written approval from the University Controller.
If an individual receives $600 or more in aggregated non-payroll payments in a calendar year (e.g., Gift Cards, Honoraria, prizes, etc.), Brown University is required to report those payments to the federal government on either a Form 1099 or Form 1042-S.
The preferred method of payment for Gift Card purchases is the Purchasing Card (P-card). If this method is used, Gift Card purchases must be pre-approved in writing by the P-card Administrator.
3.1 Allowable Circumstances
Gift Cards may be purchased and distributed under certain circumstances including, but not limited to, the following:
- For an event, (e.g., a door prize)
- For volunteers who are not Brown University employees, students, researchers, or contractors currently under contract at the University
- For Institutional Review Board (IRB) approved research study participants
- For students in emergency situations (purchase and distribution allowed only by the Associate Dean of the College for Financial Advising)
3.2 Unallowable Circumstances
Gift Cards may NOT be purchased or distributed under certain circumstances including, but not limited to, the following:
- As gifts for Brown University employees, students, researchers, or contractors currently under contract at the University
- As payment to suppliers or consultants for goods and/or services provided
For the purpose of this policy, the terms below have the following definitions:
- Gift Card:
A form of payment, physical or virtual, for a specified cash value of goods or services. This includes but is not limited to: Gifts Cards or certificates to physical stores (e.g., chain, department, or grocery stores, including the Brown University Bookstore), online stores, and restaurants.
- Gift Card Logs:
A Log maintained by the Gift Card Purchaser recording Gift Card recipient information that is required for the Controller’s Office to be able to issue applicable tax forms to recipients. Logs will include Gift Card amount, recipient name or participant ID. It is strongly recommended that Gift Card recipient information is kept in a password protected document.
Usually a one-time payment to someone outside of the University for a special service that would normally be provided free of charge. If the fee is negotiated or prescribed by the individual, this would constitute a contract for services rather than an Honorarium. Honoraria cannot be paid to individuals who make significant instructional contributions to a course or be paid over several months (e.g. to visiting scholars).
- P-card Administrator:
Individual(s) responsible for oversight of the University's P-card program. The P-card Administrator can be reached at email@example.com.
All individuals to whom this policy applies are responsible for becoming familiar with and following this policy. University supervisors are responsible for promoting the understanding of this policy and for taking appropriate steps to help ensure compliance with it.
Gift Card Purchaser: Initiates Gift Card purchases using either a P-card (with written pre-approval from the P-card Administrator) or a purchase order. Responsible for:
- Developing and overseeing Gift Card controls in the department
- Safeguarding Gift Cards at all times
- Maintaining, reviewing, and reconciling a Gift Card Log
- Ensuring the Gift Card recipient information is kept confidential
- Providing list of Gift Card recipients, including name, address, and tax identification number to Accounts Payable for tax reporting, if applicable
6.0 Consequences for Violating this Policy
Failure to comply with this and related policies is subject to disciplinary action, up to and including, suspension without pay or termination of employment or association with the University, in accordance with applicable (e.g., staff, faculty, student) disciplinary procedures.
7.0 Related Information
Brown University is a community in which employees are encouraged to share workplace concerns with University leadership. Additionally, Brown’s Anonymous Reporting Hotline allows anonymous and confidential reporting on matters of concern online or by phone, 877-318-9184.
The following information complements and supplements this document. The information is intended to help explain this policy and is not an all-inclusive list of policies, procedures, laws and requirements.
7.1 Related Policies
7.2 Related Procedures
7.3 Related Forms
7.4 Frequently Asked Questions (FAQs)
7.5 Other Related Information