Our turkey or ham gift certificates used as holiday employee gifts may qualify for the IRS de minimis exclusion, meaning the employee doesn’t 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 https://www.irs.gov/government-entities/federal-state-local-governments/de-minimis-fringe-benefits and dated June 10, 2010, 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.”
Of course, we are not tax attorneys. It would always be wise to consult with your tax accountant or attorney to see how the de minimis rule may apply in your particular circumstances.