Gifts and the Law: What to Know Before you Give — or Accept — a Gift
The holidays are rapidly approaching, and the biggest gift-giving days of the year are almost upon us, making this an ideal time to discuss the legalities of gift giving. Most of us know there are some "gifts" you can't legally give. You can't give away your kids, you can't offer a "gift" ( i.e., bribe) to a government official, and while actual monetary limits vary, your work probably won't allow you to accept a large gift either. Even personal gift giving has some legal issues involved -— make sure you are ready to give and receive gifts this holiday season, or any time of year.
Corporate Client Gift Giving
Giving thoughtful gifts to clients is a wise marketing move, as long as you don't run afoul of the law. According to a Deliot study, about 20% of all companies don't have policies in place for giving or receiving gifts. This can increase the risk of both unlawful behavior and behavior that puts your business at risk.
The United States Department of the Interior maintains rules and regulations regarding gifts and has a list of "acceptable" gifts — those that are not considered attempts to influence or bribe the recipient. Acceptable gifts, which are those that don't have innate ethical problems, include:
Modest meals, foods and soft drinks
Small items for which you pay fair market value
Discounts or perks that are also available to the general public
Gifts with $20 or less retail value
Other gifts are more problematic, particularly gifts from vendors you are considering, people who want to be hired, government officials and more. Employees should be cautioned not to accept large gifts or cash gifts, and any gift given to influence business decisions is also considered unethical.
Gift Certificates and Gift Cards
No matter what they are redeemable for, gift cards and certificates must comply with specific rules. Federal law limits the amount of fees that can be charged on inactive cards (those that you receive but don't use right away). Each state also has its own laws regarding gift cards and gift certificates, including the minimum expiration time allowed by law and the amount of fees that can be charged on inactive cards. Here in Texas, gift cards can be assessed a fee if they are not used within a year of purchase — so if your gift certificate is nearly a year old, you may start incurring fees that reduce the balance. Keep this in mind when giving or receiving cards.
Gifts and Donations
The last month of the year is prime time for giving, including donations to nonprofits. While a nonprofit will likely love your donation, the IRS does impose taxes on some types of gifts when you give these things to someone else. Private individuals that you gift something expensive to will incur taxes; you should be aware of this and ensure your thoughtful and generous gift does not become a liability. Learn more about gift taxes here, via the IRS.
Learning more about the legal obligations and rules regarding gift giving ensures you don't run afoul of the law, and that you make the most of the gifts you are giving and receiving, As always, if you have specific questions or a concern you'd like assistance with, we're here for you. Contact Tough Law to discuss your needs and discover what we can do for you.