Skip to content
BOL Conferences
Thread Options
#526891 - 04/05/06 12:54 AM Tax Reporting Small Employee Recognition Gifts
baseball banker Offline
Junior Member
baseball banker
Joined: Jul 2005
Posts: 48
California
I have worked for many financial institutions and all have held a policy allowing for employees to receive small items of recognition from the bank for doing a good job without being tax reported. $100 was generally the cut-off, although to be honest most have a value of $5 to $20. In some cases it was flowers or chocolates in other cases it was a gift certificate for a local fast food restaurant to have lunch on the bank.
I have transitioned over to a new bank that has taken the approach that gift certificates/cards regardless of their amount or the fact that the certificate indicates it cannot be redeemed for cash value must be tax reported.
Does anyone know what the IRS ruling is on this topic? I can't imagine even as bureaucratic as the IRS may be that they expect businesses to track these small recognition items.
As a matter of fact the payroll processing cost would probably be greater than the income tax collected!
Help! What are other Banks doing?

Return to Top
Human Resources
#526892 - 04/05/06 01:17 AM Re: Tax Reporting Small Employee Recognition Gifts
Kathleen O. Blanchard Offline

10K Club
Kathleen O. Blanchard
Joined: Dec 2000
Posts: 21,293
Here is a link to an EY paper that covers this topic and gives the IRS cite. Looks like the IRS is taking a tough stance that would agree with this banks application. The IRS seems to feel that because a gift certificate/card has a readily ascertainable value it must be taxed, whether or not it can be converted to cash.

Here is the IRS guidance. Frankly, the EY paper is more helpful because it discusses some IRS interpretations.

"Consult with your tax advisor!"
_________________________
Kathleen O. Blanchard, CRCM "Kaybee"
HMDA/CRA Training/Consulting/Mapping
The HMDA Academy
www.kaybeescomplianceinsights.com

Return to Top

Moderator:  Andy_Z, Gayla Sherry