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Corporate Gift Memberships
A Company can deduct up to $25 for business gifts-not including incidental costs such as engraving, wrapping, packaging, insuring and mailing-per recipient, per tax year whether the gift is given directly or indirectly. (A related cost is considered incidental only when it does not add substantial value to the gift.) The IRS considers a gift to a company-such as a fax machine or coffeemaker-that is intended for the personal use or benefit of an individual or group of people as an indirect gift. There is no limit on the deduction so long as the gift is earmarked for a company.
The reoccurring nature of each of our continuity clubs and our ability to custom tailor monthly packing slips with your company's marketing related message may allow you to expense the entire cost of the membership when it can be treated as a promotional item!
* Each circumstance should be considered individually so always check with your tax advisor if you have any questions.
Employee Incentive Memberships
Employment Achievement Awards Employee achievement awards are not treated as gifts. There are specific, separate requirements under the tax law for such awards. The IRS defines "employee achievement award" as an item of tangible personal property which is transferred by an employer to an employee for length of service or safety, awarded as part of a meaningful presentation and under conditions that do not create a significant likelihood of the payment of disguised compensation. Generally, no deduction is allowed for the cost of an employee achievement award except under certain circumstances.
The Tax Reform Act of 1986, provides, in general, that an employer may deduct the cost of "employee achievement awards" given to the same employee up to $400.00 in any year. If the incentive awards are employee achievement awards made under one or more established written plans or programs of the employer; the $400 deduction limitation is increased to $1,600 per employee. The advantage of having the incentive award qualify as an "employee achievement award" is that although it's deductible to the employer, it would not be included in the income of the employee. In addition to being excluded from the employee's taxable income, employee achievement awards also can be excluded for employment tax purposes as well as from the social security benefit base. The employer must report on the employee's Form W-2 As wages or compensation any portion of an employee achievement award that is included in the employee's income. This amount is also treated accordingly as compensation for all other tax purposes (including social security tax).
* Again, rules are subject to change, so always check with your tax advisor if you have any questions.
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