ࡱ> LNKg bjbjVV ..r<r<.,,,8d,$,>>>>>>>>$ʰ>>4>>>9<(dF:G>>0>:><<E<8" 8L>>X>E : ɫ Tech Procedure for Prizes, Awards and Gifts Nov 3, 2014 Purpose: This procedure: Describes the taxable status of prizes and awards/gifts to ɫ Tech faculty, staff, and students. Describes the tax reporting requirements for awards given to third parties, and ɫ Tech faculty, staff, and students Specifies whether ɫ Tech funds may be used to purchase prizes, awards, and gifts for employees Does not cover scholarships or academic awards which are administered by Student Affairs. Background: The Internal Revenue Code states that under certain circumstances the value of prizes and awards/gifts to individuals is considered taxable compensation. Non-US citizens are subject to additional tax regulations on tax withholding from compensation. Tax reporting on the IRS 1099-MISC or 1042-S forms will be done on an annual basis for awards to US citizens that are at least $600 and for all awards to non-US citizens. ɫ Tech is committed to compliance in all areas of its operation. Accordingly, the practice set forth below ensures that ɫ Tech find meaningful ways to recognize its students and employees, while also complying with IRS regulations. The policy applies to prizes, awards, and gifts. For simplicity, award will be used in this document for all 3 types of recognition. Policy: Tangible merchandise is tracked when it exceeds the de minimus threshold of $50. Awards with a purchase value less than $50 are not tracked or reported. (De minimus is an accounting concept that the administrative cost of booking and tracking a small dollar transaction is too burdensome.) Cash prizes, gift cards or gift certificates purchased with ɫ Tech funds and awarded to ɫ Tech faculty, staff, and students are considered taxable income and are subject to withholding and reporting, regardless of amount. The de minimus concept never applies to cash or cash equivalents. Procedures: ɫ Tech funds may be used to purchase awards to show appreciation to employees. Purchases are subject to standard purchasing and approval procedures. Cash or cash equivalent gift cards/certificates are strongly discouraged because of the administrative effort required by Finance. Appropriate awards include but are not limited to flowers, books, plaques, trophies, campus bookstore gifts or apparel, and food. Examples of events that merit an award are service anniversaries, and elapsed days without a safety incident Awards are subject to IRS regulations regarding tax withholding and year end reporting. The value of all awards to third parties, faculty, staff, and students must be reported to the Federal Tax Compliance manager for tax reporting and withholding. This applies to merchandise exceeding the de minimus threshold and any cash/cash equivalent award. Cash and cash equivalent awards to regular employees is included in the recipients gross income. Payroll taxes will be withheld in the next pay cycle following the event. The amount will be included in the employees W-2 at year end. Cash and cash equivalent awards to third parties, students and student workers over $599 in an annual period will be issued a 1099-MISC at year end. Exception: cash and cash equivalents to students and student workers who are non-resident aliens for tax purposes are issued a 1042-S at year end, and are assessed 14% income tax withholding in the month following the award event. The tax is posted as a charge to their student account or paid by the awarding department via a JV, at the awarding departments choice. Tangible merchandise awards to regular employees over $599 in an annual period will be reported on a 1099-MISC at year end. The employee is responsible for reporting this compensation on their annual state and federal tax returns. Award Tracking The Taxable Prize or Award/Gift spreadsheet collects required information to report the taxable portion of an award. Instructions are included in the spreadsheet. Forward an electronic copy of the spreadsheet via email to the Federal Tax Compliance manager within 3 business days of the event. The organization giving the award is responsible for asking whether the recipient is a non-resident alien for tax purposes and notifying them of the 14% tax assessment. Recommended Practice: ɫ Tech wants faculty and supervisors to find meaningful ways to recognize faculty, staff, and students while also complying with IRS regulations. They are encouraged to reward employees and students with tangible merchandise rather than with cash, gift cards or gift certificates. Campus organizations who stage contests and award prizes are encouraged to present winners with tangible merchandise rather than cash, gift cards or gift certificates. This allows the recipient to receive the full value of the award, and not pay withholding taxes. 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".0,/E                                                                         =w&U7N  (3 cTh!*5&;'Ov'$, .U*/41 61.k2kF4:5'7"9j9g{<=>X ?P/GIKtNLOLPMwNPQ_QA{Q+RPPTaWDWhOWmW4X:YtY,u\^ `pd9mUno&r~wow(x(Jx z :zbz{^|AKp<)}k=jG[Z)3mG[3PM-?dP~\|y{^9g=Jt| V@[fwy% 3h>.Hw 9@OX5>KE tn* \M FWsc kCŔO@&@&՜.+,0 hp   Socorro, NM#  A vehicle provided by ɫ Tech to an employee that is used for business is considered a working condition fringe benefit and no portion of the value of the vehicle need to be included in wages of the employee Title  !"#$%&'()*+,-./0123456789:<=>?@ABDEFGHIJMRoot Entry F`3O1TableVEWordDocument..SummaryInformation(;DocumentSummaryInformation8CCompObjr  F Microsoft Word 97-2003 Document MSWordDocWord.Document.89q