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Accounting Services

COMPLIMENTARY AND DISCOUNTED EVENT TICKETS AND PASSES
Effective: 09/18/17
Revised:

Related Procedure

I. Purpose

The purpose of this policy is to ensure that Clemson University complies with Internal Revenue Service (IRS) rules, regulations and accountability surrounding the issuance of complimentary and discounted University event tickets or passes (including all-access and circulation passes), the receipt of which is considered taxable income unless an exclusion exists in the Internal Revenue Code.

All supplemental policies adopted by University Departments or Units related to complimentary and discounted event tickets and passes must comply with the scope, guidelines and operating procedures outlined in this Policy.

II. Policy Statement

Clemson University is required to report complimentary event tickets or passes (including all-access and circulation passes) as taxable income (and will withhold federal and state income tax at the supplemental rate, including the applicable amount of FICA) unless one of the following Internal Revenue Code exceptions under Section 32 apply:

(A) Working Condition Fringe Benefit: Complimentary tickets and passes (including all-access and circulation passes) provided to carry out bona fide University business are not considered taxable income. Examples of bona fide University business include but are not limited to the following:

  1. Discussing a specific University issue
  2. Oversight of University events
  3. Job duties required to be performed at a University event (rather than attendance primarily for an individual's own entertainment)
  4. Acknowledging donors for a specific prior contribution
  5. Recognizing donors for a particular service to a University program
  6. Cultivating current and future support for a specific University activity
  7. Strengthening alumni support for the University
  8. Advancing the goals, objectives, and mission of the University
  9. Entertaining persons having a business relationship with the University
  10. Promoting intergovernmental relations and collaboration between the University and other public agencies
  11. Promoting civic engagement and community outreach
  12. Attracting or rewarding volunteer service
  13. Recruitment of prospective students
  14. Public relations and other similar reasons that would be beneficial to the University or a specific Department
  15. Other unforeseen activities that may occur in future years.

Spouses, partners, and guests may also receive complimentary tickets and passes (including all-access and circulation passes) under this exception if the expectation or requirement is the spouse, partner, or guest will also be part of representing the University to outside constituents.

(B) No-Additional-Cost Services: The no-additional-cost services exclusion applies to a service provided by the University if (a) the University-provided service does not require the University to incur any substantial additional costs, including labor expenses and lost revenue (i.e. the event is not sold out), (b) the service is offered on a nondiscriminatory basis, and (c) documentation is maintained to support the number of tickets sold versus the tickets or passes available. When event tickets (including all-access and circulation passes) are provided and the University incurs no substantial additional cost, the value of that ticket or pass can be excluded from taxable income.

This exception applies to complimentary single event tickets and passes only. Giving single, individual event tickets or passes to the same employee repeatedly to avoid IRS reporting is not allowed. In addition, if reserved tickets or passes are issued well in advance of the event, this exclusion cannot apply since at the time it is not known if the event will be sold out.

For sold-out events only, if one of the other exceptions to taxing a complimentary ticket or pass does not apply, 80% of the total value of the complimentary ticket or pass received by an employee will be reported as a taxable benefit. The IRS Regulations allow an employee to receive a 20% discount without it being taxed. This benefit will be separately identified on the employee's paycheck. Federal and state income tax at the supplemental rate, including the applicable amount of FICA, will be withheld. If events are not sold-out, there is no taxable benefit to the employee.

Any complimentary season tickets or passes and tickets to sold out events (including all-access and circulation passes) which are provided for personal use will be considered taxable income. Personal use includes spouses, dependents and relatives using the tickets or passes. The personal use amount will be included as taxable income to the employee whose spouse, dependents or relatives used the tickets. Federal and state income tax at the supplemental rate, including the applicable amount of FICA, will be withheld.

(C) De Minimis Fringe Benefit: In general, the IRS considers a de minimis fringe benefit to be one for which, considering its value and the frequency with which it is provided, is so small as to make accounting for it unreasonable or impractical. Occasional personal use of University sponsored event tickets or pass by employees is not considered taxable income to the employee. Occasional use is defined as four or fewer times in one calendar year to be non-taxable.

(D) Volunteers: For purposes of this policy, a volunteer is a spouse, dependent, guest of an employee, or other individual who, without compensation, provides services for the University. The volunteer may be providing services helping to promote the University or helping in various fundraising activities, including meeting prospective students or donors, conferring with legislators or others of the University community. Meetings may take place at various University functions such as alumni gatherings, fundraising events, theatrical performances, or pre- and post-game athletic event receptions.

The value of additional complimentary tickets or passes (including all-access and circulation passes) provided to the volunteer will be subject to "non-employee" taxation rules which require that a Form 1099-MISC be issued if the total cumulative value of complimentary tickets or passes from all University sources exceeds $600 or more per calendar year.

(E) Other: Trade, advertising, sponsorships and contractual complimentary tickets or passes that are required by contract, conference, association, etc. will be handled as zero valued tickets or passes and the Ticket Office must have a copy of the signed contract authorizing the complimentary tickets or passes before they will be released. This transaction is not reportable to the IRS as taxable income.

An employee and their immediate family members or guest who receives tickets or passes to events at University venues as part of an established reward or recognition program will not incur a taxable benefit

III. Scope

This policy applies to recipients of complimentary tickets or passes to University events, including:

  • The Board of Trustees and Trustee Emeriti,
  • President, Past Presidents and Vice Presidents,
  • Deans, Directors and Departmental Heads,
  • Area Managers and Supervisors,
  • Faculty and Staff,
  • Members of the Athletic Council,
  • NCAA Faculty Athletics Representative,
  • IPTAY Board of Directors and Director Emeriti,
  • Charitable and not-for-profit organizations,
  • Students, Visitors and Guests (in accordance with NCAA and ACC rules, as applicable),
  • Players and Prospects, and
  • Others, as determined, based on future circumstances.

This policy does not apply to events that do not charge for admittance. In addition, event tickets or passes cannot be given in lieu of being paid for services performed by an individual.

Allotment of complimentary tickets is provided in Appendix A which will be updated, as needed, based on future circumstances.

IV. Guidelines and Operating Procedures

The following procedures provide the guidelines for reporting personal use of a Clemson University sponsored event ticket or pass (including all-access and circulation passes) purchased with University funds. A University sponsored event is one which is sponsored by a University department, including athletic and non-athletic events, such as exhibits displayed at the Sikes Hall Showcase, performances at the Brooks Center for the Performing Arts, etc.

Once a complimentary ticket or pass has been distributed in accordance with this policy, the ticket or pass may not be transferred to any other person. Any Department issuing a complimentary single or season ticket or pass (including all-access or circulation passes) must properly account for the ticket whether reporting to the Controller is required or not.

The "value" of the complimentary event ticket or pass to be included in taxable income is determined by the posted retail price of the ticket and not by any alternative market value.

(A) Athletic Tickets, Passes and Events:

1. Regular Season Home Game Tickets and Passes: When issuing tickets or passes (including all-access and circulation passes) for regular season home games, the athletics department is only forgoing potential revenue if the tickets or passes could have been sold to the general public. As a result, complimentary regular season home tickets or passes picked up by an employee on a per-game basis are not taxable under either the de minimis fringe benefit exception or the no-additional-cost services exception, provided the event is not sold-out. This includes excess tickets or passes distributed to employees for their personal use or for distribution to family (including children) and friends. In this instance, such distribution must be a) for the purpose of increasing attendance at an event where attendance is not expected to be at least 85% of capacity, (b) announced to all University employees no earlier than 10 business days preceding the event, (c) the distribution must be infrequent or non-regular in nature and no employee may receive more than two tickets or passes to an individual event.

Home game complimentary tickets or passes picked up by an employee on a season-ticket basis are a taxable fringe benefit and will be reported as taxable income, unless a bona fide business purpose as defined in Section II (A) is documented. Appendix B is to be completed, unless otherwise noted, to document the business purpose.

For regular season home tickets and passes, 80% of the total value of the complimentary ticket or pass will be reported as a taxable benefit. The IRS Regulations allow an employee to receive a 20% discount without it being taxed. The 80% benefit will be separately identified on the employee's paycheck. Federal and state income tax at the supplemental rate, including the applicable amount of FICA, will be withheld.

Complimentary Regular Season Home tickets or passes provided to non-employees are not taxable provided one of the specified Internal Revenue Code exceptions outlined in Section II (B) are met. Otherwise, the use of the complimentary ticket or pass will be considered personal and the value will be subject to "non-employee" taxation rules which require that a Form 1099-MISC be issued if the total cumulative value of complimentary tickets or passes from all University sources exceeds $600 or more per calendar year.

Any complimentary season tickets or passes and tickets to sold out events which are provided for personal use will be considered taxable income. Personal use includes spouses, dependents and relatives using the tickets or passes. The personal use amount will be included as taxable income to the employee whose spouse, dependents or relatives used the tickets or passes Federal and state income tax at the supplemental rate, including the applicable amount of FICA, will be withheld.

2. Regular Season Away Game Tickets or Passes: For away games, there is an actual expense to the athletics department since the department must pay the visiting team for all tickets or passes over the complimentary ticket or pass allotment provided for in the game contract. As a result, complimentary regular season away tickets or passes issued to "working staff" who are making the trip for a specified business reason are considered a working condition fringe benefit and, therefore, not taxable income. In all other circumstances, individuals who want to attend regular season away games shall purchase tickets or passes which will not be reimbursed by the University.

If complimentary tickets or passes are provided by the University without meeting one of the specified Internal Revenue Code exceptions outlined in Section II (B), the value of the ticket or pass will be considered a personal use amount and will be reported as taxable income to the individual. Federal and state income tax at the supplemental rate, including the applicable amount of FICA, will be withheld.

3. Post-Season Athletic Event Tickets or Passes: Complimentary Post-Season tickets or passes (including all-access and circulation passes) issued to "working staff" who are making the trip for a specified business reason are considered a working condition fringe benefit and not taxable income. In all other circumstances, individuals who want to attend regular season away games shall purchase tickets or passes which will not reimbursed by the University.

If complimentary tickets or passes are provided by the University without meeting one of the specified Internal Revenue Code exceptions outlined in Section II (B), the value of the ticket or pass will be considered a personal use amount and will be reported as taxable income to the individual. Federal and state income tax at the supplemental rate, including the applicable amount of FICA, will be withheld.

(B) Non-Athletic Tickets, Passes and Events:

Complimentary tickets and passes provided to non-athletic events sponsored by the University shall be regulated based on the Athletic Tickets, Passes and Events requirements outlined in Section IV (A). Appendix B is to be completed, unless otherwise noted, to document the business purpose.

(C) Unused Tickets or Passes:

In order to avoid taxes on any unused tickets or passes, it is important that any unused tickets or passes be returned before noon of the game/event day or noon the Friday preceding a weekend game/event in order for these to be returned in time for sale to the public, unless earlier notice is required by the employee's department.

(D) Complimentary Tickets or Passes Allowed under NCAA and ACC Regulations:

Single or season tickets or passes given to athletes as allowed by the NCAA must be accounted for, but are not reported on a W-2 or 1099-MISC to the athlete because Clemson University is not required to report scholarships to the IRS in this manner. It is the responsibility of the athlete to determine what is reported on his/her tax return.

(E) Badge or ID, including All-Access and Circulation Passes:

A badge or ID (including all-access and circulation passes) typically allows entrance into an event for work purposes, not a seat for the event. As a result, individuals working at events or venues and gaining admittance with a badge or ID (including all-access and circulation passes) will not incur a taxable benefit.

If a Badge, ID or pass (including all-access and circulation pass) is provided by the University without meeting one of the specified Internal Revenue Code exceptions outlined in Section II (for example, issued to working staff as a working condition fringe benefit), the value of the ticket or pass will be considered a personal use amount and will be reported as taxable income to the individual. Federal and state income tax at the supplemental rate, including the applicable amount of FICA, will be withheld.

(F) Block Ticket Purchases:

Certain University Campus Units or Groups may purchase event tickets in "blocks" of more than one ticket. A block of tickets may be purchased for both athletic and non-athletic events and distributed internally by groups such as the Development Office, Dean's Office, Student Affairs and the CIO's Office, etc... It is the responsibility of the purchasing Unit or Group to maintain adequate documentation in accordance with the procedures outlined in this Policy.

If complimentary tickets are distributed from the "block" of purchased tickets without meeting one of the specified Internal Revenue Code exceptions outlined in Section II, the value of the ticket will be considered a personal use amount and will be reported as taxable income to the individual. Federal and state income tax at the supplemental rate, including the applicable amount of FICA, will be withheld.

(G) Required Documentation:

1. Personal Use: If it is determined that a ticket or pass is includable as taxable income, then the retail price of the ticket or pass will be used to value the personal use amount. Federal and state income tax at the supplemental rate, including the applicable amount of FICA, will be withheld.

In order to establish a prudent measurement period that will meet specific business-related time constraints, the individual or department head must report personal use of tickets or passes to the University Controller and Payroll Department based on a 12 month period beginning July 1st and ending June 30th. The deadline for the 12 month report will be no later than August 31st of each calendar year. The required amount of tax withholding (federal, state and FICA) will be spread over multiple pay-periods in order to avoid an unforeseen financial burden.

2. Business Use: Unless otherwise noted, documentation of the business use of complimentary tickets or passes will be provided using the "Complimentary Tickets and Passes Form" attached as Appendix B, which details the business purpose of attendance, benefit derived by the University, and the nature of any business discussion or activity. Also, indicate the business relationship between any guest in attendance and the University. Guests should be identified by name, profession, employment, or other designation that supports the purpose for which they were invited. The employee must sign, date, complete, and return the Form within ten business days after the event to the University Controller or the value of all tickets or passes will be reported as taxable income. Federal and state income tax at the supplemental rate, including the applicable amount of FICA, will be withheld.

(H) Determination of Taxable Income Inclusion:

The "value" of the complimentary event ticket or pass to be included in taxable income is determined by the posted retail price of the ticket and not by any alternative market value.

V. Responsible Office

All Athletic and Non-Athletic Departments in conjunction with the University Controller and Payroll Department

VI. Versions

Date of Initial Executive Leadership Team Approval: September 18, 2017