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YEAR-END GIFTS FOR MAIL CARRIERS: 100% DEDUCTIBLE EXPENSE FOR IRS?

Every year, we use to give gift cards to our mail carrier, UPS and Fedex carriers for their service during the year.

Should those expenses be treated as "Sales expenses"?

Or... is there another type of expenses that IRS could accept them as a 100% tax deductible expense?

 

Thank you in advance.

Answers

(Agent, JKS Solutions, Inc.) |

Why would you be giving gifts to mail carriers employed by the federal government and FedEx workers?

This is an area of cost reduction that you should take advantage of immediately. You don't know these people and they provide nothing to your organization beyond carrying out their delivery duties.

John P. Hart
Title: Vice Pres - CFO
Company: Nova Pressroom Products, LLC
(Vice Pres - CFO, Nova Pressroom Products, LLC) |

Bah humbug!
I normally find Valerie's comments insightful and helpful. :) Not this time. :(

The OP didn't mention the magnitude of the cost...but...

If the routine delivery folks are helpful, their personalities pleasant, and you enjoy their presence on a daily basis (my experience with several guys & gals over the years), then you indeed do know these folks, and they do impact your business in a positive manner. Therefore a gift may be appropriate, and it would be a deducible business expense.

Merry Christmas!

(Agent, JKS Solutions, Inc.) |

If delivery folks are helpful and their personalities pleasant they are doing their job and delivering great customer service as required by their employer. If you like them and their uniforms are crisp and clean, they are following company policy. The price of receiving that level of service is included in the price you paid for that service, and is completely deductible.

The last mess that I cleaned up was a company who gifted expensive gifts and gift baskets and gave Luxury item gifts to their brokers, clients and employees.

About 1.2 million dollars worth of NONDEDUCTIBLE gifts and luxury expenses that required comparison to non-luxury prices. The accounting fees alone far out weighed the effort.

A company would be better off either making a distribution or paying a bonus to the owners, and having the owners use that money to make personal nondeductible gifts, if they want to give luxury items, like season tickets.

Most businesses today do not allow their employees to accept gifts under their corporate governance policies, and these gifts usually make people feel weird about accepting them. Gifts with company logos and slogans are the best way to go because that is all under marketing, and usually costs less than 20 each. Find a corporate apparel company and they will find a cost effective solution for you.

Friendly praise and maybe a cup of eggnog is all that is required. If you want to really help out and give gifts, you might consider picking a charitable organization to donate to.

Accounting for gifts and providing a list of all of the transactional proof none exceeded the deduction limitation costs more than the gifts themselves.

Find another way to show appreciation and reduce your overhead, and your accountant's headaches over year end work.

In the end its the thought, not the item.

Happy holidays

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