Limits and Reporting Promotional Gifts

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Question:

Are there any dollar amount limits on promotional or gifted items given to bank clients from the bank? Who would these be reported to and is there a difference if it is an existing customer or a new one?

Answer:

If the promotional items are given away as incentives to open or increase a demand deposit account, the restrictions in Regulation Q, Section 217.101 apply.

Any "gift" given in consideration for opening or increasing a deposit will trigger disclosures in an advertisement that alludes to the gift. In such situations, the gift is a "bonus" under Regulation DD, and, depending on what's included in the ad, may trigger more complete advertising disclosures.

Finally, you need to be aware of IRS regulation that may consider such gifts as taxable events requiring the bank to report interest (1099-INT) or other income (1099-MISC), depending on the circumstances and specifics.

First published on BankersOnline.com 11/1/04