Monetary awards and cash equivalents are subject to personal income taxation. The recipient of the award or the awarding department/entity must cover tax liability. In addition, fringe benefit rates will be applied to the total transaction amount (gift plus gross-up, if applicable), creating an incremental cost to the issuing department. Utilization of gift certificates and other cash equivalents are discouraged due to transaction processing costs and additional financial implications for both the department and the recipient.
- A "cash equivalent" is any gift certificate, gift card or voucher that allows the purchase of or redemption for a product or service as if cash were being used.
- These may be purchased with the procurement card or reimbursed using the Miscellaneous Reimbursement Form following the Duke general accounting procedure under 200.021
Guidelines for Non-Monetary Awards/Tangible Gifts
Non-monetary awards/gifts should be held to a "de minimis" level so as not to result in tax liability for the staff member receiving the award. Gifts and awards of tangible personal property to staff members are "de minimis" when they (1) are awarded infrequently and (2) have an approximate fair market value that is not equal to or in excess of $100.00.
|Non-Monetary Awards/Tangible Gifts|
|Cups or mugs|
|Food or food baskets|
|Holiday turkey or ham|
|Apparel (caps, shirts, sweatshirts)|
|Trophies, plaques, or framed certificates|
|Tickets (theater, sporting events)|
Non-monetary awards/gifts can also include recognition that has a minimal monetary value but contains a level of emotional value.
|Letters of commendation|
|Personal thank-you notes|
Examples of Recognition
Example of Ineffective Recognition
During the annual holiday party, the department head gave a speech to thank everyone for their great effort throughout the year and announced that each staff member would receive a $15.00 gift certificate. The staff members were to sign for and pick up the certificates as they left the party and returned to work.
ANALYSIS: The gift certificate would be taxed and the applicable fringe benefit rates would apply to the total cost because the gift certificates are cash equivalents. Supervisors may have missed the opportunity to reinforce the intended message if they did not individually and personally thank each staff member. The memory and value of personally expressing thanks may be more impactful than the gift certificate.
Example of More Effective Recognition
In this department, the department head held a recognition luncheon and invited those who met the criteria established in the department recognition program plan. Each person received a monogrammed shirt that had a Fair Market Value of approximately $15.00 with a personal note from the department head and supervisor.
ANALYSIS: The $15.00 shirts were non-taxable since they were non-monetary awards under $100.00 in value. The personal notes and presentation was well received. The value of the gift may endure over time and provide memories each time the staff members wore the shirts.