Originally posted in Marketing but I moved it as it's more likely to be read here. There's probably been similar type posts before but I'm being asked by Marketing if we can do the following and I think we're OK but wanted to double check. We need to generate business at our Loan Center so we want to run an ad that states come in and fill out a loan application (doesn't have to be approved) and we'll give you a Patriots hat (since they're in the superbowl the local paper is running huge supplements). If they're approved for their loan and they close, we then want to give them a $100 gift certificate to an upscale rest. in our area. I know Reg D and Reg Q relate to Deposits and the amount of both gifts does not exceed $600 so there's no MISC IRS form but can we do both of the above? Sorry so long winded. Thanks!

I see no problems.

Nor do I. My previous bank gave away 13" color TVs for over a year.

You might need to have a large supply of Adverse Action forms available.

You may want to check with your CPA or tax firm on the gifts. The following is from our friends in the Eternal Revenue Service. It is strictly for "Business Gifts".

$25 limit. You can deduct no more than $25 for business gifts you give directly or indirectly to any one person during your tax year. A gift to a company that is intended for the eventual personal use or benefit of a particular person or a limited class of people will be considered an indirect gift to that particular person or to the individuals within that class of people who receive the gift.

I don't think that banks normally treat these as business gifts for tax purposes, but they more likely treat it as promotional expense.

Best advice, give away Panthers hats. Everyone wants to wear the hats of winners : )

In Charlotte, one thing, not gonna happen! Go Pats!!!!

FWIW, I had lunch with a friend in the IRS today, and posed a brief scenario of a gift certificate for mortgage. He mentioned that the bank would have to issue a 1099-Misc for each recipient, for the stated value of the certificate.

I checked out the IRS site, and as Randy stated, could not validate the information. Another lesson - Never trust anyone who says "I'm from the IRS, and I'm here to help."

Your IRS friend better go back and read the regulations, because unless the value of the certificate is greater than $600, there are no reporting requirements.

RESPA does not prohibit a lender or other settlement provider from giving the borrower an incentive for doing business with it as long as the incentive is not based on the borrower referring business to the lender.