SAFFORD — The Safford City Council begrudgingly approved a change to city policy when it comes to gifts to employees.
The policy reflects requirements of the IRS and the state of Arizona when it comes to declaring as taxable income the value of some — but not all — gifts.
Rob Sweeny, interim Finance director for the city, explained that certain gifts are considered of such little value or are given so infrequently as to be impractical to include as compensation for tax purposes. That includes gifts such as flowers on a birthday or anniversary, or a turkey or ham given at the holidays.
However, if the gift is cash or something with a cash equivalent, such as a gift card, it doesn’t matter how small the amount and the gift must be taxed. Noncash items valued at $100 or more must also be taxed.
Councilman Luke Arbizo said employees are concerned about the policy.
“Talking to the employees, they’re not very happy about this,” Arbizo said. “Is there a way that the city can pay those taxes for them?”
Sweeny explained that the city can, and recently did for the employees’ holiday bonuses; however, depending on the number of employees receiving gifts and the gift amounts, it could prove administratively burdensome. Also, it’s unlikely a gift from the city would elevate the employee into a higher tax bracket.
Mayor Jason Kouts said “extra work” shouldn’t be a reason to keep the city from paying the tax, and originally suggested tabling the proposed change in policy until the process is finalized; however, staff recommended adopting the policy and bringing back plans on how the city can ensure that a gift does not add an extra tax burden to the employees.
The policy also stipulates that employees and employee families may not receive gifts from a vendor or bidder over whom the employee has direct supervision or authority, including the solicitation and awards of bids.
Groups and individual employees without direct supervision may accept a noncash gift valued up to $25 once per year, such as a lunch catered for a department.
Reception of any gift must be reported to the Finance Department.
Gifts to the public, vendors or bidders by the city or its employees are not allowed.
The policy also prohibits employees from soliciting fellow employees for contributions, memberships, purchase of products or other expenditures during the workday.
