Recognition Awards and Gifts to Employees

Purpose and Limit

[1] The annual per-person limit does 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 the gift.

[2] Limits for parking permits and transit passes are indexed for inflation by the IRS and subject to annual adjustment.

[3] Limits are for U.S. residents for tax purposes only. Contact the Foreign Tax Desk (glacieradmin@berkeley.edu) if issuing a gift to a U.S. nonresident.

[4] Staff Appreciation and Recognition (STAR) Program

[5] Departments are responsible for reporting taxable gifts to Central Payroll

[6] 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.

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.

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/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 Central Payroll Office. To report taxable gifts, complete the Gift to Employees Google Form. Gifts should be reported within one month of presentation.

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 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.

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.

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.