USA Non-employee Gift purchases for non-profits

[cmorten]

Hi there I am a new accountant and am struggling for resources. I have found many websites that reference a policy that in some way discusses how giving a gift to a non-employee is taxable to that person based on certain circumstances. The websites in question will state something like the following:

"In the event that a department chooses to provide a gift to an individual, the gift may be taxable. Gifts purchased with university funds are taxable to the non-employee recipient, per IRS regulations, if any of the following statements are true:

1. The aggregate value of the gift is greater than $75; or
2. The gifts are provided on a routine basis; or
3. The gift is provided in the form of cash (i.e. cash, check, gift card, gift certificate, etc.)."

It says "Per IRS Regulations" but I cannot find any IRS documentation online where it references bullets 1-3. Can someone point me to an IRS publication that discusses these circumstances? I have placed a couple links below to some of the sites I have found that discuss this topic but have been unable to confirm through any IRS publication.

Non-Employee Gifts - Taxation - Finance Division - Carnegie Mellon University

Non-Employee Gifts

www.cmu.edu

Non-employee Gift Purchases

www.oit.edu

Thanks in advance

 

[kirby]

Do a web search on "de minimis gifts $75". There you will find many sources that say that IRS has no defined dollar amount for gift limits but many organizations just use $75 as a policy.

 

[cmorten]

Thank you Kirby, You answered another question I was having about gift limits very much appreciated.

 

[cmorten]

I reviewed the De Minimis Fringe Benefits on the IRS website and it discusses employees and how items that do not qualify would need to be reported on the W-2 but what I am wondering is how this could apply to non-employees? The discussion I have been having with my co-workers is around giving things like gift cards to students and volunteers and when is it appropriate to track those for the purposes of a 1099-MISC. Our University has a policy that says any gift card given over $50 is taxable and we are required to report that to our business affairs office, I am currently trying to establish policies for our alumni association who is a separate 501c3 and from time to time the association staff gives out gifts and gift cards to the university students as well as volunteers. The guidance I have been seeing online says that when something like a gift card is given that a W-9 should be collected, a written acknowledgement from the recipient of the gift card should be obtained and this should be tracked because if that person receives $600 or more they would need to receive a 1099-MISC. Does the De Minimis Fringe Benefits apply to non-employees as well?

 

[kirby]

"Does the De Minimis Fringe Benefits apply to non-employees as well?"
Strictly speaking, no. Reason is gifts to employees are compensation while a gift to an individual who does not in any way work for you or is a volunteer is just a gift. But you can understand why a policy would say that for a gift over $600 treat it as compensation and send a 1099-MISC. Reason is that it avoids issues of things looking bad.
Then again - consider that your 501c3 should really be more concerned about RECEIVING bucks than PAYING bucks out the door.

 

[cmorten]

Thanks again for the guidance Kirby, it is very much appreciated.