Policy and Guidelines
Campus departments wishing to provide an employee with a recognition award or gift must conform to the guidelines as outlined in the relevant policy below. Situations that may warrant a gift include recognition for a noteworthy work-related accomplishment, length of service, retirement, or sympathy.
Employee recognition awards are meant to be occasional. An employee should not receive more than three (3) such awards in a calendar year.
Sympathy gifts may be presented in the event of the death or major illness of an employee or a member of the employee’s family or household.
Tax Reporting
UC policy aligns with IRS regulations. The Tax Cuts and Jobs Act (P.L. 115-97) that was signed into law on December 22, 2017, impacts the taxability of certain types of employee achievement awards. Specifically, gift cards provided to an employee for employee achievement are considered taxable wage income on and after January 1, 2018. If an employee receives such an award for length of service, then the value of the gift card must be reported by the department to the Payroll Policy and Controls Office for appropriate federal and state income tax and FICA withholding. Updates to UC policy are pending further guidance from the IRS.
Campus departments are responsible for providing this information to the Payroll Policy and Controls Office within one month of presenting the gift.
To report a taxable gift or award, please use the following online form: Report Taxable Gift/Award to Payroll
Questions may be directed to payhelp@berkeley.edu
Obtaining the Gift or Award
Departments should follow routine procurement processes when purchasing gifts.
Examples of allowable gifts:
- Flowers or fruit
- Book or plaque
- Ticket to a sporting or cultural event
- Other items of tangible personal property
- Only in cases of expressing sympathy, a cash donation to a charity
Examples of gift items that are not permitted under policy:
- Cash, except donation to a charity as an expression of sympathy
- Gift card/certificate for the purchase of services (e.g., spa treatment, golf lessons)
- Gift card/certificate that can be redeemed for cash or used to reduce an account balance
- Recreation memberships
- Season tickets to sporting or cultural events
- Gifts provided to employees in connection with birthdays, weddings, anniversaries, holidays, farewells, graduations and other occasions of a personal nature
- Cash contributions to any political campaign, political party, committee or group engaged in any attempt to influence the general public with respect to legislative matters, elections, or referendums
Gifts may be purchased with State funds if the purpose is for employee recognition, length of service or retirement. Federal or State funds may not be used for sympathy gifts, cash contributions, raffle prizes, door prizes, or incentive gifts. Various non-State funds controlled by the University (e.g., endowments, gifts, etc.) may be used for employee awards in accordance with UC policy and subject to any restrictions on those funds.
Items donated from campus departments are permitted. The cost of promotional gifts such as T-shirt or mug bearing the University logo is limited to $75 per individual.
Issuing Gifts and Awards
Except for items of minimal value (i.e., T-shirt), the gift must be accompanied by a transmittal letter on University letterhead indicating that the gift was made on behalf of the University.
Effective January 1, 2018, the IRS excludes gift cards from the definition of tangible personal property. Giving gift cards in certain circumstances is strongly discouraged. Departments choosing to give gift cards, parking permits or transit passes in recognition of length of service or, per the IRS, safety achievement, must report the fair market value to the Payroll Office. To report taxable gifts, complete the Gift to Employees Google Form. Gifts should be reported within one month of presentation.
Employee Recognition
Employee recognition awards should be provided within an established program and based on objective criteria. Such awards must also be presented to employees on a basis that does not discriminate in favor of highly compensated employees.
Length of Service and Retirement
Length of service awards may be given to recognize meritorious length of service of at least five years. The recipient must not have received a similar length of service gift in any of the prior four years.
Both length of service and retirement gifts must be awarded as part of a meaningful ceremony and should not be determined based on an employee’s classification.
Sympathy
A sympathy expression via a cash contribution may be made to a charitable organization in lieu of a gift of tangible personal property. Such contributions must be accompanied by a transmittal letter on official University letterhead stating that the donation was made on behalf of the University.
If the recipient is both a student and an employee, a determination must be made as to whether the gift is dependent on the individual’s employment relationship with the University. If the gift is not dependent in any fashion on the fact that the student was also employed by UC, the gift will be treated as a non-employee transaction.
Purpose and Limits
UC policy, G-41 Employee Non-Cash Awards and Other Gifts, establishes annual per-person spending limits based on the purpose of each award or gift. The spending limits are established to avoid taxable income to the employee as a result of the gift, however, campuses are allowed to set more restrictive limits.
Recognition awards and gifts allowable under this policy are primarily non-cash awards consisting of tangible property gifts or nonnegotiable gift cards, with the exception of a sympathy cash contribution to an allowable charity.
Tax treatment for each award varies depending on the type and amount of the award or gift. The spending limits and tax treatment outlined in UC policy are for U.S. residents for tax purposes only. If issuing a gift to a U.S. nonresident, contact the Foreign Tax Desk at glacieradmin@berkeley.edu.
Important: If the gift or award is taxable, the department is responsible for reporting taxable gifts to Payroll.
About Tangible Property Awards and Gifts
Tangible property awards and gifts are described as physical items that can be touched or moved. Tangible property may also include nonnegotiable gift cards redeemable for tangible property. Nonnegotiable means they cannot be redeemed for cash or services, and are non transferable.
Note that the annual per-person limits, when applied to tangible property gifts, do not include incidental costs, such as costs for engraving, packaging, insurance, sales tax, mailing and the cost of gift wrapping that do not add substantial value to a gift.
Limits and Tax Treatment by Type of Award
Employee Recognition, Prizes and Incentives
- $75 annual per-person limit
- Nontaxable if the cost or value is $75 or less
- If cost or value is more than $75, the entire amount is taxable and exceptional approval is required
- May be given as a nonnegotiable gift card or certificate
These awards include Spot awards, door prizes, gifts associated with event participation, incentives to complete a survey or questionnaire or other modest employee recognition award. These awards do not pertain to employee recognition under the Staff Appreciation and Recognition (STAR) Program.
Employee Recognition: One-month Parking Permit or One-month Transit Pass
- $280 annual per-person limit
- The entire amount is taxable
If the cost or value of a monthly parking permit or transit pass award exceeds the per-person limit, only the amount in excess of the limit is reported as gross income subject to withholding of income, social security and Medicare taxes. However, the University will be subject to unrelated business income taxes (UBIT) for only the amount that is treated as pretax transportation benefits under IRC Section 512(a)(7). If the entire cost or value of the monthly parking permit or transit pass is not treated as a pretax transportation benefit, then the entire amount is reported as income subject to income, social security and Medicare taxes and the University will not be subject to UBIT.
Note that limits for parking permits and transit passes are indexed for inflation by the IRS and subject to annual adjustment.
Length of Service Achievement
- $400 annual per-person limit
- If given as a gift card or certificate, whether negotiable or nonnegotiable, the award is taxable
- If given as a tangible property gift, the item is not taxable up to $400. If more than $400, the amount exceeding $400 is taxable.
Important: for the length of service achievement award, the recipient must have completed at least five years of service, and must not have received a similar length of service gift in any of the prior four years.
Retirement
- $400 annual per-person limit
- Awarded as tangible property, the gift is not taxable up to $400. If more than $400, the amount exceeding $400 is taxable.
- May include a nonnegotiable gift card or certificate as tangible personal property
Sympathy: Tangible Property Item
- $75 annual per-person limit
- Nontaxable if the cost or value is $75 or less
- If cost or value is more than $75, the entire amount is taxable
- May be given as a nonnegotiable gift card or certificate
Sympathy: Cash Contribution to an Allowable Charity
- $200 annual per-person limit
- Entire amount is nontaxable
Important: Cash contributions in lieu of a sympathy gift must be made on University letterhead stating the donation was made on behalf of the University, and may not be made to any political organizations, groups or committees that seek to influence the general public on any legislative, political or electoral matters.