Awards, Gifts & Prizes

Type

Finance Policies

Scope

This policy defines Awards, Gifts, and Prizes in recognition of achievements, service, appreciation, or promotional purposes, and identifies when it is appropriate for the University to pay for them. Payments to participants in research studies are excluded from the scope of this policy.

Reason for Policy

To ensure the proper recording of Awards, Gifts and Prizes as well as to ensure that each type of payment is taxed, if appropriate.

Policy Statement

The University may provide Awards, Gifts, and Prizes when such expenditure is reasonable and necessary to carry out the mission of the University, and subject to further restrictions set forth in this policy. They may not be lavish or extravagant, and must comply with any funding source restrictions. Proper classification of payments is necessary to differentiate between those considered scholarships, which may be tax free, and those that are Awards, Gifts, or Prizes, which may be taxable.

Awards and Prizes may be cash, including gift certificates or gift cards, or non-cash items. Gifts must be in the form of non-cash items.

Awards to Employees

Awards paid to employees are governed by Human Resources policies. The Award must be reported as employee compensation on the employee's Form W-2 and is subject to federal withholding and FICA taxes. The Award must be recorded in the payroll system for proper taxation unless the award qualifies for specific exceptions. The department presenting the Award must notify Campus Finance and Human Resources to be properly reported. The following are specific exceptions where reporting to Campus Finance and Human Resources is not required:

Certain Achievement Awards of tangible property (not cash or gift certificates)
Non-cash, de Minimis Awards

IRS guidelines dictate that if an employee is given the choice of taking an Award as cash or having the Award amount put into a university account to support their work (travel, research, etc.), the amount is taxable to the employee in either case. Awards that an employee chooses to have put into a university account will be taxed as taxable perquisite. Awards that are put into a university account must only be spent for a valid business reason and must be in compliance with University policies. If the employee is not given the choice of taking the Award as cash (the Award can only be a contribution to a university account to support their work), then it will not be considered taxable to the employee.

Awards to Non-employees

Awards given to non-employees are reportable as taxable income. Non-cash Awards to non-employees with little intrinsic value, such as medals, trophies, and plaques are not reportable. The University will file a Form 1099-MISC to report the Awards when the value of cash and the fair market value of non-cash Awards to an individual total $2,000 or more in a calendar year. The taxpayer identification number (e.g., Social Security number) must be provided for reporting purposes.

Note: Granting/awarding financial aid is not considered an Award for purposes of this policy. Awards to students that are related to academic performance are considered financial aid and, as such, are not subject to the provisions of this policy.

Gifts

To qualify as a gift, there should be no negotiation in advance for the gift. Gifts must be non-cash. Cash and gift cards or certificates, are not allowable as Gifts. Gifts should be of nominal value and, ideally, bear the University's licensed logo. Non-cash, de Minimis Gifts, as defined in this policy, are usually not reportable to the IRS.

To Employees: In limited circumstances, flowers or other non-cash Gifts to employees are allowed if approved by the President, Chancellor or designee, use unrestricted non-operating funds or restricted gift funds approved for that purpose. Non-cash Gifts to employees must be in the University’s best interest, not related to job performance, and not to celebrate events which are personal in nature. Gifts including those for birthdays, weddings, funerals, showers, and other personal events - are usually not allowable expenditures of University funds. At their discretion, co-workers may contribute personal funds for this purpose.
To Non-employees: Non-cash Gifts may be presented as a token of appreciation to a donor, dignitary, guest, volunteer, visitor (or in certain circumstances, customer or client) when a valid and documented business purpose exists, such as to recognize contributions to the University or to honor a distinguished visitor. Examples are token items given to donors by Advancement Office or mugs given to conference attendees.

Prizes

Prizes may be awarded in accordance with this policy through Games of Chance or Contest of Skill. The department or organization sponsoring or awarding a Prize must maintain detailed records of all receipts and expenditures associated with the contest or event, including the winner’s name, address, taxpayer identification number (e.g., social security number), amount spent for a Ticket or Chance (if any), and the value of the Prize won. Prizes can only be awarded to University employees when the individual’s employment is incidental to the basis on which the prize is awarded.

The University must report Prize winnings to the IRS and to the recipient on a calendar year basis. Federal regulations also require that a specific percentage of the winnings be withheld under certain conditions. Non-cash winnings will be reported at their fair market value.

All Games of Chance must be submitted to Campus Finance for tracking and 1099 reporting. Events with Games of Chance held for a philanthropic purpose with individual prizes of $5,000 or less do not require approval prior to the event. Games of Chance with individual prize(s) exceeding $5,000 must be approved by Campus Finance and be evaluated by the Office of General Counsel prior to the event. The University and its departments may conduct fundraising activities, such as silent auctions, that do not involve Games of Chance with approval from Advancement pursuant to UM System Financial Policy 22205.

Door prizes, a type of Game of Chance, for non-philanthropic purposes (such as sporting events) are allowed at University events if the individual Prize does not exceed the Non-cash, de Minimis value, as set forth in this policy. The Prize must be available equally to all attendees and does not require purchase of a Ticket or Chance for direct entry into the drawing.

Cash and non-cash Prizes may be awarded to individuals for participation in Contests of Skill. Prizes for Contests of Skill may only be awarded where benefits are expected to accrue to the University. All contests associated with Contests of Skill must be conducted in accordance with Missouri state law.

Awards, Gifts and Prizes to Non-resident Aliens

Prizes and Awards to non-resident aliens are generally subject to 30% withholding and reported to the IRS. �ǿմ�ý must contact the Non-resident Alien Tax Specialist before processing cash or non-cash Awards, Gifts, and Prizes to persons who are not U.S. citizens or legal permanent residents.

Definitions

Awards - cash, gift certificates, or non-cash merchandise given for meritorious performance, productivity, or other reasons connected with employment; or for non-employees, given in recognition of an accomplishment, achievement or activity that does not require the performance of a service, as well as for other valid business reasons.
Certain Achievement Awards - Awards of tangible property (not cash or gift certificates redeemable for cash) that are not reported as taxable to an employee. The Award must be awarded in a meaningful presentation that emphasizes the purpose of the Award. The value of the Award funded by the University may not exceed $400 per year per employee. These may include the following:
- Length of Service Award - is not reported as taxable if it is not granted to an employee more frequently than every 5 years. A retirement gift generally will not be reported as taxable.
- Safety Award - is not reported as taxable so long as the following conditions are met:
  - It is provided to no more than 10% of eligible employees; and,
  - Managers, administrators, clerical, and professional staff are ineligible for the Award.
Contest of Skill - a competition in which the winner is determined primarily by the participants’ abilities—such as judgment, strategy, dexterity, knowledge, or other human skills—rather than by chance. Examples of contests of skill include activities such as an essay-writing contest or basketball shooting contest.
Door Prize - a Game of Chance and type of raffle where the Prize is awarded based only on attendance, and does not require the purchase of a Ticket or Chance to win.
Games of Chance - bingo, raffles, sweepstakes, and/or casino games as well as other gambling type activities whether it requires purchase of a Ticket or Chance or not.
Gifts - non-cash items, whether of value or of nominal value, given to express appreciation or gratitude; not related to job performance and no negotiation conducted in advance.
Noncash, de Minimis Awards – for University purposes, de Minimis is defined as having a value less than or equal to $100. Gift certificates and gift cards are considered cash for purposes of this policy, and do not meet the de Minimis exception.
Prizes - cash or items of value received as a result of a Game of Chance or Contests of Skill, either with or without the purchase of a Chance or Ticket.
Ticket or Chance - something of value that is given to participate in a game or contest including but not limited to any admission to the event venue.

Accountabilities

UM System Controller’s Office

Issuing W-2s or 1099s as appropriate on taxable items

Campus Finance Office

Approve Games of Chance exceeding $5,000 in individual prize(s).
Track Awards, Gifts, and Prizes exceeding the non-cash, de minimis threshold, their associated values, and the recipients.
Report Awards, Gifts, and Prizes to Accounts Payable Shared Services for non-employees and Human Resources for employees.

Accounts Payable Shared Services

Recording of payments that are taxable within the University’s financial system

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Notify and report to Campus Finance and Human Resources any Awards paid to employees
Request approval for Games of Chance exceeding $5,000 in individual prize(s)
Notify and Report to Campus Finance of all events with Awards, Gifts and Prizes and the associated values paid to non-employees.
Contact the Non-resident Alien Tax Specialist before processing cash or non-cash Awards, Gifts, and Prizes to persons who are not U.S. citizens or legal permanent residents.

Office of General Counsel

Evaluate requests where individual prize(s) exceed $5,000

Additional Details

History

Require Office of General Counsel evaluation for prizes greater than $5,000 and update 1099 reporting requirements from $600 to $2,000 per IRS regulation (revised 04/07/2026)

Formerly Business Policy Manual 216 – Awards, Gifts, & Prizes (revised 03/16/2015)

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