The restrictions for discounts on products or services (whether regular or occasional) offered to employees are specified in POL05.15.03 for Non-Salary and Deferred Compensation. Discounts or privileges not listed in the policy must be approved, in advance, by the Board of Trustees. The Non-Salary Compensation Form must be completed.
Taxation of Discounts and Privileges
The value of discounts and privileges that are waived, exceed the 20% threshold set by IRS, or provided to employees not authorized by the policy as a working condition fringe benefit, must be reported to University Payroll as taxable compensation. The compensation will be included in the taxable grosses for social security, Medicare, federal, and state reporting. Social security (OASDI) and Medicare taxes (Fed-Med) are withheld on the paycheck.
Employee: The employee has no reporting responsibility
College or Department: The college or department must report to University Payroll on a monthly or quarterly basis (or immediately for employees who terminate) the following information:
- Employee name
- Employee ID number
- Type of discount (meals, product or service)
- Date(s) discount was provided
- Dollar amount of the discount
University Payroll: Based on the information provided by the department, University Payroll will enter the taxable value into the HR system using the appropriate earnings code:
- DM1 – DiscMeals – Discount Meals
- DP1 – DiscProd – Discount Products
- DS1 – DiscServ – Discount Services