Purpose:
Section titled “Purpose:”Gift cards should only be purchased by the Office Manager or Controller. Gift cards of any nature or amount that are redeemable for general merchandise or have a cash equivalent value are considered income by the IRS and are taxable to employees. centrexIT will add the amount of all gift cards given to employees to wages on their W-2. centrexIT recognizes that reporting gift cards as income places an additional tax burden on its employees and will gross up the amount of the gift card wages to cover the taxes that are withheld.
Scope:
Section titled “Scope:”Gift cards can be awarded to any employee under a qualified benefit program or as approved by management. Gift cards should only be purchased by the Office Manager or Controller and all employee gift card purchases must be reported to Accounting for tax recording purposes.
Responsibility:
Section titled “Responsibility:”Accounting owns this prodecure, which is to be followed by all cIT employees.
Definitions:
Section titled “Definitions:”- Gift card - A card or certificate redeemable for general merchandise or that has a cash equivalent value.
Procedure:
Section titled “Procedure:”-
Requestor submits an email to the Office Manager or Controller requesting a gift card(s) be purchased. The following information must be included in the email.
a. Who is receiving the gift card
b. The purpose of the gift card
c. The number of gift cards and dollar amounts per card
d. The gift card vendor – Amazon, Starbucks, etc…
e. The gift card type – physical or electronic
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The Office Manager purchases the gift card(s) and
a. Delivers the gift card to the requestor or
b. Distributes the gift card to the employee on behalf of the requestor
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In either situation, the Office Manager must submit a list of all employee gift cards purchased to Accounting immediately after distributing the gift card. The list must contain the following information.
a. Employee name
b. Date employee received the card - per the IRS, the gift card becomes taxable to the employee on the date the card is constructively received, not when, or even if, it is used
c. Gift card amount
d. Gift card purpose
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Accounting will add the grossed up gift card amounts to employees’ wages in the year that the cards were received.
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All employee gift card purchases should follow the above process, but in the rare case that the Office Manager or Controller is bypassed, the person purchasing the employee gift card must follow the same process.
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This process only applies to gift cards purchased and given to employees and does not apply to gift cards purchased and distributed to someone outside of centrexIT.
Effectiveness Criteria:
Section titled “Effectiveness Criteria:”A gift card is purchased, received by an employee, and has been added to the employee’s W-2 wages.
References:
Section titled “References:”N/A
Process References:
Section titled “Process References:”N/A