Awards, Prizes & Cash Equivalents
Allowable Uses of Cash Equivalents
Definition of Cash Equivalents
Cash equivalents are stored-value products such as gift certificates and gift cards. The IRS specifically defines these instruments as cash equivalents and states that their value is considered taxable income to the recipient, regardless of dollar value. See IRS.
Definition of Prizes
A prize is a cash equivalent presented as a result of participation in a contest, drawing or judged competition. Prizes should be expensed to object code 03-SJ (Prizes)
Definition of Awards
An award is a cash equivalent given, usually to an employee or student, in recognition of past accomplishments. The recipient has made no formal entry or submission and the recipient did not undertaken the recognized activity primarily for the financial benefit of the award. Awards should be expensed to object code 08-AB (Awards).
Definition of Business Gift
A business gift is a cash equivalent given to an individual to express gratitude or appreciation for support of the University’s mission. The recipient performed no service nor provided other consideration in exchange for the gift. Business gifts should be charged to object code 03-JE (Recognition Awards).
IRS regards gift cards as cash equivalents which creates tax and reporting implications for both the recipient and the University. When gift card distribution occurs, it is important for the protection of the recipient, department personnel, and WSU that the appropriate tax reporting processes are followed, see BPPM 70.44.
WSU has authorized the use of Tango Card which supports purchase and distribution of a wide variety of gift cards online. There is no service fee. Departments may directly establish an account with the supplier and use the Purchasing Card for payment. For more information please visit https://www.tangocard.com.Please note: The department must maintain a distribution log for payments of cash, gift cards, and other cash equivalents. These records must be retained according to normal retention policies.