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Business and Financial Policies and Procedures

Determine the Allowability of Gifts, Prizes, and Awards to Individuals

Before You Begin

The Internal Revenue Service (IRS) considers cash or cash equivalent awards (such as gift cards and gift certificates) given to University of Illinois employees (including student employees) as taxable income when the gift, prize, or award is in conjunction with their employment status. University Payables (UPAY) reports employee awards in the form of gift cards/certificates to University Payroll and Benefits (UPB) for tax reporting and withholding. Cash awards to employees are processed directly through UPB using ANA. For information on processing awards, consult Make Employee Award Payments in ANA.

Gifts, prizes, and awards given to non-University of Illinois employees are processed through UPAY. Gifts, prizes, and awards given to non-employee recipients classified as non-resident aliens for tax purposes must be processed through UPB to ensure proper tax reporting and/or withholding. For information on processing honoraria, consult Request Payment for Honoraria.

Expenditures using self-supporting funds must be directly related to generation of the funds' revenue.

Expenditures using gift or endowment income funds must be in compliance with donor intent restrictions.

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To determine whether gifts and awards to individuals are an allowable expense:

Select a category below. Click on a link to open or close it.
Cash, Gift Card, or Gift Certificate Awards to Employees

Allowable Criteria
May be given as part of an official University or unit award or recognition program such as retirement, outstanding achievement, length of service, or door prizes at an employee event.

How to Purchase and Process
Cash Awards - Consult Make Employee Award Payments in ANA.

Gift Card or Gift Certificate - Do NOT purchase gift cards or gift certificates with a University P-Card, University purchase order, or through the iBuy procurement system. Purchase using:

Allowable Funds
Must be institutional, self-supporting (when directly related to generating revenue), gift and endowment income, or service plan funds. Institutional funds must use an account code with a "U" at the end for exclusion from the indirect cost study.

Taxable
Monetary awards in the form of gift cards/certificates given to employees are taxable and must be reported to University Payables. Consult Tax Implications for Payments for additional information.

Tangible, Non-Monetary Gifts and Prizes to Employees

Allowable Criteria
May be given only as part of an official University or unit awards and recognition program such as retirement, outstanding achievement, length of service, or door prizes at an employee event.

Examples
Clocks, watches, paperweights, plaques, mouse pads, mugs, engraved pens, etc.

How to Purchase and Process

Purchase with:

Allowable Funds
Must be from institutional, gift and endowment income, or service plan funds. Institutional funds must use an account code with a "U" at the end for exclusion from the indirect cost study.

Taxable
Tangible gifts and prizes with a cumulative value of $100 or more given to employees within a calendar year may be taxable and must be reported to University Payables. Consult Tax Implications for Payments for additional information.

Tangible, Non-Monetary Gifts and Prizes to Employees for Life Events

Allowable Criteria
Units may acknowledge these personal life events of their employees or families:

  • Birth or adoption of a child
  • Death of an employee
  • Death of an immediate family member (spouse, parents, or children)
  • Employee hospital stays
  • Promotions received by an employee
  • Separation and/or retirement of an employee

Not allowable - Holiday, birthday, wedding, graduation, and other similar events

Examples
Flowers, plants, fruit baskets, greeting cards, or similar items

How to Purchase and Process
Purchase with:

Required Approvals
Your campus OBFS executive officer must approve acknowledgements for life events other than those under Allowable Criteria.

Allowable Funds
Must be from institutional, gift and endowment income, or service plan funds. Institutional funds must use an account code with a "U" at the end for exclusion from the indirect cost study.

Taxable
Gifts of $100 or more may be taxable and must be reported to University Payables. Consult Tax Implications for Payments for additional information.

Gifts, Prizes, and Awards to Non-Employees

Allowable Criteria
May be given when the business purpose for the gift, prize, or award supports the primary missions of the University.

Examples
Gift cards/certificates, flowers, artwork

How to Purchase and Process
Purchase monetary gift cards/certificates using:

Purchase tangible gifts, prizes, or awards using:

  • The University P-Card
  • I-Buy requisition
  • Banner requisition
  • TEM vendor payment request (only if less than $500)

Process cash payments (in the form of a check or ACH payment) using TEM. Consult Request Payment for Cash Gifts, Prizes, and Awards.

Allowable Funds
Must be from institutional, gift and endowment income, or service plan funds. Institutional funds must use an account code with a "U" at the end for exclusion from the indirect cost study.

Taxable
Gifts, prizes, and awards may be taxable and must be reported to University Payables if $100 or more. Consult Tax Implications for Payments for additional information.

Gifts and Prizes to Non-Resident Aliens

Allowable Criteria
May be given only as recognition for the individual's contribution to the mission of the University.

Examples
Gift cards/certificates, flowers, artwork

How to Purchase and Process
Gifts and prizes given to non-University employees who are classified for tax purposes as non-resident aliens must be processed through University Payroll to ensure proper reporting and/or withholding. For additional information, consult Payments to Foreign Nationals.

Allowable Funds
Must be from institutional, gift and endowment income, or service plan funds. Institutional funds must use an account code with a "U" at the end for exclusion from the indirect cost study.

Request Reimbursement for Items Purchased on Behalf of the University
Request Payment for Cash Gifts, Prizes, and Awards
Open a Program Advance
Request Payment for Goods Under $500
Make Employee Award Payments in ANA
Request Payment for Honoraria
Section 18.5, Fringe Benefits for additional information regarding the tax consequences of gift certificates and gift cards.
Section 7.6 - The University Purchasing Card (P-Card)

Gross-up Calculator
Payroll Who to Ask
Payments to Foreign Nationals
Tax Implications for Payments

Last Updated: June 16, 2016 | Approved: Senior Associate Vice President for Business and Finance | Effective: September 2012

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