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Buying Gift Cards

Purchases of gift cards must comply with Policy & Procedure Manual (PPM) Section 380-50, Employee Non-Cash Awards and Policy & Procedure Manual (PPM) Section 260-45, Gifts Presented to Nonemployees.

Departments may purchase gift cards with a university Purchasing Card, DaFIS Direct Charge (DC) document, or DaFIS Departmental Purchase Order (DPO) document.

P&PM 380-50 allows non-cash awards to be presented on behalf of the university to its academic and staff employees for:

• Work related awards
  • Employee recognition ($75 or less per award)
  • Length of service ($400 or less per award)
  • Retirement ($400 or less per award)

Gift cards presented to employees as recognition awards must be given infrequently. Awards presented to an employee on a regular or routine basis must be reported as taxable income to the employee.

Non-cash awards exceeding the amounts above require a written exception approved by the Associate Vice Chancellor - Finance. There may be income tax implications when the value exceeds those amounts.

Unallowable gift card purchases include:

• Taxable awards (e.g., length of service or retirement awards in excess of $400)
• Gift cards used as honoraria payments

Departments that recognize possible problems with past gift card purchases should contact Charles McDonald in order to make any necessary corrections (e.g., tax reporting) and discuss ways to prevent similar purchases in the future.

Gift cards are normally not subject to a use tax at the time of purchase, since use tax will be paid when the card recipient uses the card. Also, service fees, shipping charges and initial load fees are not taxable. Handling fees are taxable only if listed separately at the time of purchase. Contact the vendor directly if you believe that they have incorrectly assessed a tax.

For gift cards purchased with a Purchasing Card, a system-generated tax may be added for cards purchased from some out-of-state vendors. The Purchasing Card Duplicate Tax Form should be processed to remove the tax.