1-8: Employee gifts

Effective: October 15, 2025
Approved by: Van Christensen
References: IRS Publication 15-B, Utah Code 67-16, Governor’s Executive Order EO 002 2014

Purpose

This policy outlines the conditions and requirements for the employer purchasing employee gifts. It is written to comply with IRS regulations regarding employee taxability. It doesn’t apply to gifts received from third parties that are subject to Utah Code 67-16 (Public Employees Ethics Act) or Governor’s Executive Order EO 002 2014.

This policy does not include length-of-service or retirement awards. See policy 1-2: Incentive awards and bonuses.

This policy does not address the specific way to make a payment or the system to use. See policy 1-1: Employee payments general policies and procedures.

Definitions

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

De minimis fringe benefits – A small benefit provided by an employer that is so minor and infrequent that accounting for it would be unreasonable or impractical.

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

Policy

A – Agencies may occasionally give employees gifts

1 – Agencies may occasionally buy small gifts for their employees when the gift is intended to improve working conditions, employer-employee relations, employee health, and employee life events.

2 – Prior to any gift purchases, employees must receive approval from the executive director or designee.

B – Agencies must have their own policy

1 – Agencies must have their own policy for buying gifts.

2 – Agencies’ policies must ensure that:

gift purchases are approved by the executive director or designee;
gifts are only given occasionally;
gifts are fair and equitable and do not favor any employee or group of employees;
gift purchases per employee do not exceed $99 per occurrence; and
gift purchases per employee do not exceed a total of $396 in a fiscal year.

C – Cash equivalent gifts are taxable

1 – Agencies may give employees cash equivalent gifts (e.g., gift cards, movie passes, admission tickets).

2 – All cash equivalent gifts are taxable and must be reported to payroll.

3 – See Finance policy 5-27: Gift cards for additional gift card procedures.

D – Non-cash gifts must be de minimis to be nontaxable

1 – Agencies may give employees non-cash items (e.g., apparel, flowers, consumables).

2 – Non-cash gifts are nontaxable to the employee as long as the item is considered a de minimis fringe benefit by the IRS.

2a – Non-cash gifts must not:

exceed $99 per occurrence;
be routine; and
exceed $396 in a fiscal year.

3 – Non-cash gifts are taxable to the employee if the value of the gift exceeds $99 per occurrence or $396 in a fiscal year or the gifts are routine regardless of the amount.

E – Gift purchases must be properly coded

1 – Agencies must code payments for taxable employee gifts to object code 5155 and report the amount to payroll.

2 – Agencies must code payments for non-taxable employee gifts to object code 6270.