New Director for Legal/Legislative Issues
ACSI welcomes Dr. Thomas J. Cathey as the new director for legal/legislative issues. Tom, a native Floridian, has served in Christian education for the past 31 years. He began his career by teaching second grade before becoming an elementary principal and then a head administrator. His career spans three schools in Florida, the most recent being the first stand-alone Christian high school in Florida—Calvary Christian High School—of which he was the founding administrator.
Tom served on the regional council for the ACSI Southeast Region before becoming a regional council member for the then newly formed ACSI Florida Region. He has served as Florida’s inaugural ACSI Executive Board member for the last nine years. As the chairman of the Legal/Legislative Committee of the ACSI Executive Board, he worked closely with Burt Carney, who retired on June 30, 2008. Tom received his bachelor’s degree in biblical education from Florida Bible College, and his master’s degree and doctorate in educational leadership from Nova Southeastern University. Tom and his wife of almost 33 years, Gail, have four grown children. Tom shares that he is very excited to be able to affect Christian education on a broader level by working with schools nationwide on legal/legislative issues. You can reach the Legal/Legislative Office by calling 719.528.6906 or by emailing tom_cathey@acsi.org.
Giving Gift Cards to Employees
The abundance of gift cards has made it relatively easy for employers to reward their employees. However, there are some guidelines that must be followed in the giving of gift cards to employees. John L. Cooley of WootenHart plc law firm in Roanoke, Virginia, recently addressed this issue in ACSI’s fall 2008 Legal/Legislative Update. The remainder of this article comes from hisresponse regarding the legal implications of giving gift cards to
employees.
Many employers have given employees gifts at Christmas, usually consisting of a turkey or a ham or another such item. These have generally been considered nontaxable gifts to employees. However, over the last few years, more and more employers have begun the practice of giving employees gift cards that have a set monetary value. Not only are these convenient for the employer, but they also allow the employees to use the card whenever they desire, for whatever items are permitted by the card. However, the question has arisen regarding whether these gift cards are nontaxable.
In response to this practice, the IRS issued a Technical Advice Memorandum after reviewing a particular case in which a nonprofit that had previously given food gifts to its employees decided to forgo the hassle, time involved, and other issues and, instead, gave a gift card that had the approximate value of the food gift it had previously given. Since the gift card was a cash equivalent, the IRS concluded that it was taxable and that the employer had to include the gift card value in the employee’s income. The employer argued that the gift card was a de minimis fringe benefit. However, gift cards have a readily ascertainable face value (in this case, $35). Therefore, the value was a taxable benefit to the employee.
Schools naturally could be curious about whether there is an amount less than $35 that the IRS probably would not consider taxable. However, under the provisions of Internal Revenue Code, Section 102(c), a gift does not include “any amount transferred by or for an employer to, or for the benefit of, an employee.” Thus, it would appear that where there is any cash transferred to an employee by the employer, the amount of the cash transfer or the value of what would be cash is taxable. Arguably, even a $5 gift card would constitute income since the employer is providing it and the value is easily ascertainable.
These facts do not mean that a school should not give gift cards. Giving gift cards is a nice way to show appreciation and to allow the employees the freedom to use the cards conveniently. However, the school must make sure that it includes the value on the employees’ W-2 forms.
Legal Report 12.2