Taxable Awards and Gifts | KCTCS

Administrative Procedures

Taxable Awards and Gifts

Policy Number: 5.5.12-P

Current Effective Date: 07/01/2019

Original Effective Date: 11/01/2006

Revision Dates: 11/01/2006, 04/01/2010, 05/30/2017, 07/01/2019

Revision Number: 4

Revision Summary:

Responsible Official: Director of Payroll

References:

1. Purpose

To outline the taxability of awards and gifts to employees.

2. Scope

This procedure applies to all KCTCS employees.

3. Awards, Prizes, and Gifts

3.1

Awards, prizes, and gifts given to employees are generally subject to federal, state, social security, and local tax withholding and are included in the employee’s taxable income.

  1. The fair market value of goods or services is included as taxable income for tangible goods or services.
  2. Gifts excluded as de minimis fringe benefits include: Holiday gifts of small value (less than $50), so long as they do not consist of cash or cash equivalents.
  3. Cash equivalents (gift cards) per IRS Publication 15-A are deemed taxable income.
  4. Prizes, gifts, or awards not purchased by KCTCS, but distributed by KCTCS, are subject to taxation.

4. Length of Service Awards

4.1

Length of service awards must meet the following criteria to be exempt from taxation:

  1. The award must be in the form of tangible personal property, which does not include items such as cash or cash equivalents, vacations, meals, lodging, or tickets to theater and/or sporting events. 
  2. The award must not be presented for less than five (5) years of service on the job and must not have been awarded to the same employee within the last four (4) years. 
  3. The award must be presented in a meaningful presentation that emphasizes the employee’s achievement.