Gift Card Policy

ROWAN UNIVERSITY POLICY

Title: Gift Card Policy
Subject: Finance
Policy No: FIN:2020:01
Applies: University-wide
Issuing Authority: President
Responsible Officer: Senior Vice President for Finance and CFO
Adopted: 10/01/2020
Last Revision: 10/01/2020
Last Reviewed: 10/01/2020

I. PURPOSE

To establish guidelines for the procurement, distribution, accounting, and reconciliation of gift cards to meet the needs of the University community while facilitating the University’s tax compliance reporting and internal cash control requirements. The purchase and use of such items requires strict accountability – gift cards may only be used for prizes and awards or to compensate human subject research participants.

II. ACCOUNTABILITY

Under the direction of the President, the Provost, Sr. Vice Presidents, Deans, Department Heads and Department Chair are responsible for ensuring University implementation of this policy. The Vice Presidents, Deans, Department Managers and Supervisors shall ensure compliance with this policy.

III. APPLICABILITY

This policy applies to all full-time, part-time, permanent and temporary employees, faculty, staff, officers, volunteers and students.

IV. DEFINITIONS

Gift Cards – are considered cash equivalent. Throughout this policy the term “gift card” shall include gift certificates and electronic gift cards except where specified otherwise.
Custodian – the person responsible for disbursing, collecting, reconciling and submitting the gift card supporting documentation to Accounts Payable.
Institutional Review Board (IRB) – the administrative body responsible for protecting the rights and welfare of human subjects participating in research activities conducted by the University.
Tax Identification Number (TIN) – A Taxpayer Identification Number (TIN) is an identification number used by the Internal Revenue Service (IRS) in the administration of tax laws. It is issued either by the Social Security Administration (SSA) or by the IRS. A Social Security number (SSN) is issued by the SSA whereas all other TINs are issued by the IRS.
United States Person– for the purpose of this policy is a citizen of United States, an entity or a resident alien for US tax purposes.
Non-U.S. Person – for the purpose of this policy is a nonresident alien individual, a non-U.S. entity and any other person that is not a U.S. citizen. U.S. law treats U.S. persons and foreign persons (non-U.S. persons) differently for tax purposes. Therefore, it is important to be able to distinguish between a U.S. person and non-U.S. person.
Principal Investigator – the Rowan faculty or staff that is identified as the Principal Investigator, Project Director, or Co-Principal Investigator named in the award, agreement or contract that is the steward of the sponsored project funds and overall responsibility for the financial and technical aspect of sponsored human subject research.

V. REFERENCES

VI. POLICY

General Requirements:
1. The University pays business expenses by using appropriate Procurement methods (refer to the procurement and accounts payable policies listed in section V.References). Gift Cards cannot be used to pay vendors for goods and/or services received and/or rendered or pay any type of wages for services rendered. For example gift cards may not be used to pay University suppliers, independent contractors, guest speakers, consultants, honorariums or stipends at any time. As such, gift cards should be used as a last resort.
2. The University places strict restrictions concerning the purchase and distribution of gift cards. Therefore, gift cards may only be allowed in situations where it is determined that the expenditures are in the best interest of the University and promote the overall mission of the University. For example, gift cards may be utilized:
  1. As an incentive to encourage participation in Rowan University research studies, as authorized by the IRB.
  2. Prizes or awards, with prior approval from the requestor’s Dean or AVP.
3. The determination of whether a gift card is an allowable prize or award is dependent upon the selection of the recipient, the reason for the distribution and the recipient’s affiliation to Rowan University. For example:
  1. Student workers and employees may not be provided gift cards for work or education related activities (e.g., bonuses, incentives, rewards, prizes, gifts, etc.) outside of participation in IRB-sanctioned research.
  2. When the incentive to encourage participation involves enrolled students, the department should utilize the RowanCard system instead of a gift card when feasible.
4. The University must comply with Internal Revenue Service (IRS) regulations as it pertains to gift cards and gift certificates at all times. Under Internal Revenue Code Section 132, a gift card, gift certificate, store-value card, or a prepaid credit card, collectively referred to as a gift card, is considered a cash or cash equivalent that is subject to taxes regardless of the face value. The value of gift cards given to non-employees is taxable and reportable income on IRS form 1099 if the value of gift cards plus any other non-W2 compensation received by an individual from the University as a whole aggregates to an amount of $600 or more per calendar year. As such, the following must be collected from the recipient prior to distribution of the gift card:
  1. Recipient’s name, clearly written
  2. Recipient’s TIN
  3. Recipient’s address
  4. The date of distribution
  5. The value of the distributed gift card
  6. The number of the distributed gift card
  7. The recipient’s signature acknowledging receipt of the gift card (if obtaining a direct signature is not possible, the reason must be clearly and fully explained; alternative controls must be duly approved by Accounts Payable and documented).
5. Any and all collection of an individual’s social security number/TIN by the Custodian is secured and locked in a cabinet and any electronic document is not maintained and stored on a local desktop, laptop or other electronic device.
6. Gift card face values are limited to the denominations authorized by an approved IRB study, or $100 for gift cards procured for gifts or awards outside of the IRB approval process.
7. Principal Investigators are responsible for ensuring that human subject research participant payments are being managed according to this policy and who is the appropriate Custodian for their research project.
8. Gift cards held by a custodian should not exceed $2,500 at any one time. If more than $2,500 worth of gift cards are required at any given time, a written approval from the Controller’s unit is required.
9. The authorized Gift Card Request Form must be submitted to Accounting Services at least two weeks prior to being provided with gift cards.
10. All gift cards are to be requested and distributed within a reasonable time once received.
  1. Two months for gift cards procured as allowed by an IRB-sanctioned research study, unless pre-authorized by the Controller’s unit to extend the holding period.
  2. One month for gift cards procured for gifts or awards outside of the IRB approval process.
11. Failure to follow this policy and procedure and to maintain appropriate supporting documentation can result in the suspension of the privilege to procure and distribute gift cards.
Tax Limitations for Gift Cards
In order to ensure University compliance with the laws and regulations requiring tax reporting for certain payments to individuals, the following rules must be followed when distributing gift cards:
1. Gift cards are unallowable for work or education related activities (e.g. bonuses, incentives, rewards, prizes, gifts, etc.) to Rowan University employees and student workers outside of participation in IRB-sanctioned research. This amount will be tracked and if an individual exceeds the $600 threshold, the employee or student will receive an IRS Form 1099 or W-2 for tax reporting purposes.
2. Gift cards, regardless of value, cannot be given to anyone considered a non-U.S. person for tax purposes due to tax withholding requirements. Compensation of a non-U.S. person must go through Human Resources.
3. Gift cards cannot be purchased as gifts to graduating students.
4. Gift cards cannot be used to compensate collaborators in a research study.
5. The custodian is responsible for submitting all supporting documentation including a log that contains the purpose, date the name of the person receiving card. The log should be sent to Accounts Payable within 30 days of distributing the gift cards (but no later than January 5^th for all gift cards distributed in the month of December, due to the timing of IRS Form 1099 reporting).
Authorized Methods for Purchasing Gift Cards:
Only the following options are available for the purchase of the cards:
1. Complete the Gift Card Request Form.
  1. The University has an arrangement with TD Bank to be able to provide departments with a flexible solution for receiving physical gift cards to distribute to recipients. Unless otherwise pre-approved by the Controller’s unit, TD Bank gift cards are the University’s preferred gift card vendor.
  2. The University has an arrangement with our Amazon account to provide departments with a flexible solution for receiving electronic gift cards when physical gift cards are not a viable option (primarily when research is required to be performed remotely).
  3. Gift cards required to be procured from a vendor other than TD Bank will require supporting justification and pre-approval from Accounting Services.
2. Please note, the required authorization on the gift card request form is as follows:
  1. IRB sanctioned studies will require documentation of the IRB sanctioned study noting the approved use of gift cards.
  2. Gift cards purchased with external grants will require authorization from the Grants and Contracts Accounting Director noting the allowability of the expense against the grant funds.
  3. Gift cards purchased outside of an IRB sanctioned study will require the authorization of the requestor’s Dean or AVP.
  4. All gift card request forms must be signed by the Controller of the University.
Non-Allowable Gift Card purchases:
The following gift card expenditures are prohibited:
1. Gift cards/gift certificates cannot be purchased with university funds for the purpose of giving an employee or student worker a gift, bonus, prize, reward, expression of recognition, special occasion, social function or meals.
2. Gift cards/gift certificates cannot exceed the denominations authorized by an approved IRB study, or $100 for gift cards procured for gifts or awards outside of the IRB approval process.
3. Gift cards cannot be used to incentivize participants in human subject research studies unless pre-authorized by the IRB.
4. Gift Cards may not be purchased through the University’s Barnes and Noble account.
5. Gift cards may not be purchased using the University’s Procurement Card system.
6. Gift cards may not be reimbursed on a non-PO payment request form unless pre-authorized by Accounts Payable.
7. Gift Cards cannot be used to pay vendors for goods and/or services received and/or rendered or pay any type of wages for services rendered. For example gift cards may not be used to pay University suppliers, independent contractors, guest speakers, consultants, honorariums or stipends at any time.

VII. ATTACHMENTS

Custodian Requirements and Responsibilities
Gift Card Request Form

Attachment 1
Custodian Requirements and Responsibilities

Upon approval of the Gift Card Request, the cards will be issued to the custodian listed on the Gift Card Request Form. The custodian agrees to hold, disburse and track the distribution of their gift cards in accordance with the University policies and procedures. Custodians agree to perform the below actions for all gift cards issued.

Disburse the gift cards for the purpose noted on the Gift Card Request Form.
Maintain gift cards in a secure and locked location – within the department or at the site of the related activity – accessible only to the designated gift card custodian. Gift cards are not allowed to be stored at off campus property.
Prevent the co-mingling of gift cards purchased for different projects or purposes.
Maintain documentation of the distribution of gift cards. Recommended is a list bearing:
1. Recipient’s name, clearly written
2. Recipient’s TIN
3. Recipient’s address
4. The date of distribution
5. The value of the distributed gift card
6. The number of the distributed gift card
7. The recipient’s signature acknowledging receipt of the gift card (if obtaining a direct signature is not possible, the reason must be clearly and fully explained; alternative controls must be duly approved by Accounts Payable and documented).
Ensure that all gift cards are reconciled at least monthly and at the end of each event. All gift cards held are subject to periodic unannounced audits by the Controller’s Office to ensure proper control is maintained.
Surrender any gift cards not distributed within the time allowed (two months for IRB approved studies, and one month for all others) to Accounting Services for a return to the University’s bank accounts. If additional time is required to distribute, written authorization is required from the Controller’s unit prior to the end of the period.
Retain all related documents in accordance with governing laws and regulations.
Purchase the minimum number of gift cards per event to prevent an excessive amount of unused gift cards.
Submit all supporting documentation of distribution to Accounts Payable within 30 days of distributing the gift cards (but no later than January 5^th for all gift cards distributed in the month of December, due to the timing of IRS Form 1099 reporting).

Attachment 2
Gift Card Request Form

Page tree