1.0 Policy Purpose
The purpose of this policy is to define when and what types of prizes are permitted to be given and the tax implications thereof to ensure the University is in compliance with federal and state tax laws and regulations.
2.0 To Whom the Policy Applies
This policy applies to all Brown University faculty, staff, and students.
3.0 Policy Statement
Prizes may be monetary or tangible and are given either in recognition of outstanding achievement or to the winner(s) of a competition. Prizes are not restricted to the recipient’s work or research goals.
Monetary prizes, which include cash or cash equivalent payments, gift cards, and gift certificates, are considered taxable income, regardless of the amount. Gift cards may only be given as prizes in cases where the recipient is randomly selected (e.g., a door prize), in accordance with the Gift Card Policy.
Tangible prizes valued at greater than or equal to $100 are considered taxable. Tangible prizes valued at less than $100 are considered De Minimis. Examples of tangible prizes include flowers, books, trophies, plaques, event tickets, and food.
Allowable prizes include the following:
- Academic prizes (e.g., Dean of the College prizes, student activity prizes, art prizes, academic department prizes)
- Door prizes
For the purpose of this policy, the terms below have the following definitions:
Business Purpose: A required statement that adequately describes the expense as a necessary, reasonable, and appropriate business expense for the University. All expenses must support or advance the goals, objectives and mission of the University.
De Minimis: So small in value that it is not reasonable or practical to account for its value. Cash and cash equivalents are never considered De Minimis according to the IRS
All individuals to whom this policy applies are responsible for becoming familiar with and following this policy. University supervisors and employees with student oversight duties are responsible for promoting the understanding of this policy and for taking appropriate steps to help ensure and enforce compliance with it.
Financial Coordinator: Initiate cash prize payments in Workday using a supplier invoice with Spend Category Prizes and Premiums: 5410.
Cost Center Manager: Approve the supplier invoice, ensuring the spend category is accurate and the Business Purpose and supporting documentation are complete.
Accounts Payable: Review the supplier invoice for policy compliance.
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