Per IRS regulations, gift cards and gift certificates with a face value on them are considered cash equivalents and may therefore be subject to employment taxes and IRS reporting requirements. The procedure outlined on this page will ensure that campus departments are in compliance with IRS regulations and UC policy when it comes to purchasing, safeguarding, and tracking recipients of gift cards and gift certificates.

Types of Gift Cards

UC policy restricts the types, amounts, and recipients of gift cards and gift certificates. Before you purchase gift cards, please review the following policy summaries for employee and non-employee gifts to ensure that your department is in compliance with UC policy and IRS regulations.

Employee Gift Cards

Before you purchase gift cards or gift certificates to distribute to employees, please review the UC policy BFB G-41: Employee Non-Cash Awards and Other Gifts. Generally, gift cards and gift certificates may be presented on behalf of the University to employees for the following work-related reasons:

  • Employee Recognition - Spot Awards ($10 - $75)
  • Sympathy Gift - Tangible Personal Property (limited to $10 - $75)
  • Prizes and Other Gifts - Incentive for employees to participate in an event, survey, or questionnaire ($10 - $75)
  • Employee Length of Service ($10 - $400)
  • Employee Retirement ($10 - $400)

Gift cards presented to employees as recognition awards must be given as part of an established recognition program. Awards should be presented to employees occasionally on an infrequent basis to avoid being reported as taxable income to the employee. An employee may not receive more than three employee recognition awards in a calendar year. Please note: Employees are responsible for notifying their supervisor if they receive gifts exceeding the amounts or quantity outlined in policy.

Work with your Departmental Business Officer on exceptional requests. Exceptional requests must be approved by email to the Vice Chancellor for Administrative Services and the Campus Policy Coordinator. See https://www.vcadmin.ucsb.edu/contacts for contact information.

Non-Employee Gift Cards

Before you purchase gift cards or gift certificates for non-employees, please review the UC policy BFB G-42: Gifts Presented to Non-Employees on Behalf of the University. Generally, gift cards and gift certificates in the amount of $10 - $599 may be presented on behalf of the University to non-employees for the following business-related purposes:

  • Appreciation or Recognition - Student awards for noteworthy academic achievements or for participation in a University-sponsored activity
  • Incentive - Student or volunteer awards as an incentive to complete a research study or as an incentive to complete a survey or questionnaire
  • Incentive - Door prizes provided to non-employees to encourage participation in a University-sponsored event

In addition, the policy allows for Promotional Items in the amount of $75 or less and Sympathy Gifts in the amount of $200 or less. Gift cards exceeding the values or frequency outlined above require written exception to BFB G-42 due to the tax implications of exceeding policy limits.

Work with your Departmental Business Officer on exceptional requests. Exceptional requests must be approved by email to the Vice Chancellor for Administrative Services and the Campus Policy Coordinator. See https://www.vcadmin.ucsb.edu/contacts for contact information.

Purchasing and Tracking of Gift Cards

Gift cards and gift certificates can be purchased using the Gateway system, FlexCard, and by reimbursement. Purchases must be tracked and supporting documentation maintained.

Supporting Documentation Guidance

Tracking Log

Gift cards are cash equivalents and should be monitored and tracked by Departments. In addition, gift cards may be subject to employment taxes and IRS reporting requirements. BFS has created an example of a tracking log that may be used to satisfy these requirements.

excel icon Employee Gift Card Tracking Log
excel icon Non-Employee Gift Card Tracking Log

Please submit a ServiceNow ticket if you have questions or require additional instructions regarding documentation or tracking of gift cards or gift certificates.

Physical Security Requirements for Gift Cards

Before you purchase gift cards or gift certificates, please review the UC policy BFB BUS-49: Policy for Cash and Cash Equivalents Received. This will ensure that your department is in compliance with physical security requirements for gift cards and gift certificates. Per BFB BUS-49, cash and cash equivalents such as gift cards and gift certificates:

  • Must be maintained by individuals that have attended cash handling policy training and separation of duties must be employed to ensure that no single individual is solely responsible for the entire cash equivalent process;
  • Cards must be logged by a unique numbering system (e.g., last 4 digits of card number) and tracked throughout the cards life cycle from purchase to disbursement. The Gift Card Tracking Logs linked above can be used for this purpose.
  • Must be locked in a secure receptacle or safe at all times except when signed out by a cashier for distribution of the gift cards or gift certificates;
  • Must be locked in receptacles or burglarproof/fire-resistant safes

Please submit an email to cash.info@bfs.ucsb.edu if you have questions or require additional instructions regarding safeguarding gift cards or gift certificates.