This means employees would not need to claim them as income, they don't need to be run through Payroll, and the employer may claim them as a business expense. The IRS confirmed this in a recent post on their website.
Their post, located at http://www.irs.gov/Government-Entities/Federal,-State-&-Local-Governments/De-Minimis-Fringe-Benefits and dated January 28, 2014, states:
"A certificate that allows an employee to receive a specific item of personal property that is minimal in value, provided infrequently, and is administratively impractical to account for, may be excludable as a de minimis benefit, depending on facts and circumstances."
Our certificates qualify for all of these requirements. Retailer gift cards and many other gift certificates, on the other hand, do not qualify. Here's another quote from the same IRS document:
"Cash or cash equivalent items provided by the employer are never excludable from income...Gift certificates that are redeemable for general merchandise or have a cash equivalent value are not de minimis benefits and are taxable."
Click here for a full discussion of this issue.
*Of course we are not tax attorneys. Please consult with your tax accountant or attorney to see how the de minimis rule may apply in your particular circumstances.
Other advantages of our gift certificates as employee holiday gifts:
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