Michigan State University
Controller's Office

Administration Bldg
426 Auditorium Rd, Rm 305
East Lansing, MI 48824
517 355-5020

SECTION 44: Issuing Gifts, Gift Cards, and Prizes

Last updated: March 2018

I. Policy Introduction and Definitions

This policy does not apply to MSU-sponsored Employee Awards, Service Recognition Programs, or Student Financial Aid/Awards/Scholarships.

Gifts and prizes include cash payments, gift cards, and non-cash gifts paid for with University funds.

Gift cards are any card with a specified dollar value, including retail cards, cards (e.g. Meijer, Spartan Bookstore), VISA or other debit-style cards, and Spartan Cash.

Non-cash gifts include gift certificate for a specific item (e.g. a certificate or coupon for specific item such as a coffee at Sparty’s, a t-shirt at Spartan Bookstore) and tangible personal property including plaques, flowers, clothing, art, and household goods.

This policy does not apply to sponsorships or donations – see MBP Section 47.

II. Employees

  1. Cash Payments - two options:
    1. Lump sum cash payments through payroll. These actions -are governed by MSU’s formal “Special Lump Sum Merit Increase” policy through Human Resources.
    2. Gift cards and gift certificates for a specified dollar value. These are considered cash per the IRS and are taxable. A Special Payment Authorization Form (staff) or Additional Payments Form (faculty) must be submitted to record the amount of the gift card/certificate as taxable to the employee using the non-cash wage type code 7045. If you have multiple employees that you will be processing please contact the Payroll Department (355-5010) for an alternate upload procedure. Gift cards for employees cannot be purchased with the MSU Purchasing Card.
    3. Example: For outstanding customer service, a department awards employees with a $50 gift card to the Spartan Bookstore. The gift cards are taxable to the employee and the value must be reported via an additional pay form.

  2. Note: Student employees are NOT eligible for gift cash payments of any kind.

  3. Non-cash gifts

    Infrequent (once per year recommended), low dollar (not to exceed $75) non-cash gifts (coupon specific item such as a coffee at Sparty’s, a t-shirt, pen, etc.) may be purchased for employees and are considered nontaxable to the employee. Such gifts should only be used to reward work performance and may not be given for personal occasions (birthdays, anniversaries, retirements, etc.). General funds may not be used to purchase such gifts. The total of all non-cash gifts to an employee must not exceed $75 in a calendar year.

    Example: For outstanding customer service, a department awards employees each semester with a coupon for a sundae at the Dairy Store. Since it is a coupon for a specific item that is both low dollar and given infrequently, it is not taxable to the employee.

III. Students

Students are not eligible for University-funded gifts. See Item VI below for information regarding prizes for formal contests/drawings, special events, and departmental (non-research) surveys.

IV. Volunteers and Guests (and other non-employees, non-students)

  1. Cash Payments

    Honoraria payments may be paid on a Disbursement Voucher (Payment Reason Code G) - please see Manual of Business Procedures (MBP) Section 71.

  2. Gift Cards

    Gift cards for volunteers or guests are allowed. The value of the gift card(s) may not exceed $75.

    The purchase of such gift cards must be processed via Disbursement Voucher (Payment Reason Code H or I). Use of the MSU Purchasing Card to purchase gift cards for volunteers and guests is not allowed.

    Gift cards may not be purchased in bulk and set aside for future gifts. The cards may only be purchased for specific purposes and must be distributed within two weeks of purchase.

  3. Non-cash Gifts

    Non-cash gifts for volunteers or guests may be purchased (use of the MSU Purchasing Card is allowed if otherwise allowable). The value of non-cash gifts may not exceed $75.

  4. Documentation

    When gift cards or other non-cash gifts are purchased for volunteers or guests, detailed receipts and clear documentation of business purpose must be included with a unit’s Disbursement Voucher or MSU Purchasing Card records. The documentation must also include a disbursement log detailing recipient name, amount, and date given.

    The value of cumulative gifts to non-employees must be tracked on a calendar year basis by the giving department. In the rare cases where the value of all gifts exceeds $300, recipient name and amount must be reported to Accounting (accounting@ctlr.msu.edu) for tax reporting purposes by December 31.

V. Research Participants

Payment for research participation is not considered a gift. The MSU Purchasing Card and other payment methods may be used to purchase gift cards for research participants where allowable under formal grants or contracts. Please consult your specific grant or contract for eligibility.

VI. Prizes for Formal Contests/Drawings, Special Events, and Departmental (Non-Research) Surveys

Prizes for organized contests and drawings, MSU-sponsored events (for example, a student event hosted by Campus Living Services), departmental surveys, etc. are generally not considered gifts for the purposes of this policy. Before purchasing and awarding such prizes over $75 in value, please contact Accounting (355-5000) for approval, payment processing options, and tax reporting requirements.

VII. Accounting for Gift Cards

The MSU Purchasing Card may not be used to purchase gift cards with the exception of use for research participant incentives (see V. above).

Where their use is allowed, gift cards must be:

  1. Purchased in quantities ONLY to the extent needed. Extras should not be purchased in advance.
  2. Purchased cards must be logged in a unit-maintained record. This log must include number of cards, value of cards, business purpose regarding how the cards will be used, who the card was distributed to, intended use of any leftover cards, if any, and final disposition/use of leftover cards (see sample log).
  3. Leftover cards may only be used for the purposes allowed in this policy.
  4. While in the possession of the unit, gift cards must always be safeguarded (stored in a secure, locked area).