FIACCT 5-27: Gift cards

Effective: July 10th, 2025
Approved by: Van Christensen
References: IRS Publication 15-B

Purpose

This policy explains when gift cards can be purchased and the internal control requirements that must be in place to purchase and distribute them.

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Definitions

Agency – Any agency, board, bureau, commission, office, department, or other administrative subunit of the executive branch of state government. 

Designee – The person who has written permission from the executive director to act on their behalf. 

Policy

A – Gift card purchases must be necessary and approved

1 – Agencies may purchase gift cards when there is a written justification for their need and intended purpose.

2 – Before purchasing any gift cards, the executive director (or agency equivalent) or designee must approve gift card purchases.

B – Gift cards must be controlled by a custodian and kept secure

1 – The agency must assign an employee to be the custodian of the gift cards. 

1a – The custodian is responsible for keeping record of, distributing, and physically securing gift cards.

1b – The custodian is responsible for compliance with this policy.

2 – Physical gift cards must be kept in a safe or locked drawer where access is limited to the custodian.

2a – When access cannot be limited to the custodian, the access must be limited to only those necessary.

3 – Gift cards should only be purchased on an as needed basis to reduce the risk of theft, misuse, or fraud.

3a – If an agency has a need to have gift cards on hand, the inventory should be small.

4 – If an agency buys and distributes digital gift cards, they still must use the same or similar internal controls detailed in this policy.

C – Gift card purchases must be logged and tracked

1 – The agency must keep a log of all gift cards purchased. The log must include:

• date of purchase;
• the type of gift card;
• the amount;
• the recipient of the gift card; 
• the date distributed to the recipient; and
• the reason the gift card was given.

2 – The gift card custodian must obtain the recipient’s signature evidencing receipt of the gift card in the stated amount. If it is not possible to obtain the recipient’s signature, an employee independent of the gift card custodian must sign as a witness that the gift card was sent or given to the recipient.

3 – The log and recipient signatures must be maintained by the agency or uploaded into Vantage Financial.

D – Gift cards are taxable

1 – Gift cards,  no matter the amount, are considered taxable income when given to an employee. 

1a – Agencies must report all gift cards distributed to employees to the GovOps Division of Finance payroll team, ERICpayroll team, or agency payroll coordinators so that the value can be added to each employee’s taxable income by submitting: 

• form FI 48: Employee reimbursement/earning request form using wage type 1128; or 
• a ticket to finance support.

1b – Object code 5155 (non-payroll incentive awards) must be used for all purchases of gift cards given to employees.

2 – If a gift card is given to a non-employee, the total value of gift cards distributed during a calendar year must be less than the IRS threshold for reporting on an IRS form 1099. Currently, the IRS reporting threshold is $600 or more.

E – Agencies may have privileges revoked

1 – Agencies who do not follow this policy may have privileges of buying and distributing gift cards revoked.