Approved by President
Effective Date: June 5, 2017
Responsible Division: Business and Finance
Responsible Office:  Business and Finance
Responsible Officer:  Associate Vice President, Business and Finance

I. Purpose

This policy establishes the process used by Middle Tennessee State University (MTSU or University) for payments to research participants through cash or gift card payments.

II. General

A.  Payments to research participants, regardless of delivery method (check, direct deposit, cash, traditional gift card, or electronic gift card) are considered compensation by the Internal Revenue Service (IRS). Research participants receiving a payment, or series of payments, for participating in a research study(ies) must complete a Form W-9 at the time they receive payment.

1.  Personally identifiable information should be gathered in a manner which prevents disclosure of personal information to other research participants.

2.  Signatures must be obtained from research participants, indicating receipt of the cash or traditional gift card payment.

3.  Research participants should be informed that information collected allows the University to meet government reporting obligations and precautions are in place to keep their information secure. Participants may be given the opportunity to participate without receiving payment, if they do not wish to provide identifying information.

B.  Payment amounts and Form W-9’s collected in Section A. above must be forwarded to Accounting Services, which has the reporting responsibility to the IRS.

C.  Payments of greater than one hundred dollars ($100.00) to research participants for participation in studies should be made through the accounts payable system via check or direct deposit.  

D.  Some research studies use low dollar payments to compensate participants for time, inconvenience, or as an incentive to increase participation. When such payments are not more than one hundred dollars ($100.00) per payment, per participant, and individual participant payments by the University aggregate to less than six hundred dollars ($600.00, it may be appropriate to make payments utilizing cash, traditional gift cards, or electronic gift cards, as long as the following procedures are followed. Payments totaling six hundred dollars ($600.00) or more to an individual, in a calendar year, must be reported by the University to the IRS on Form 1099-MISC.

III. Prohibition from Use of Cash or Gift Cards in Research Studies

A.  No payment may be made to a MTSU employee or non-resident alien; an individual who is not a U.S. citizen, or U.S. National, and has not passed the green card test or the substantial presence test. This information should be ascertained prior to an individual’s participation in the study. Contact Accounting Services for assistance.

B.  Written pre-approval should be obtained from Athletic Compliance for participation of student-athletes in the research study, to ensure the student’s athletic eligibility is not jeopardized.

C.  Cash and/or P-Cards may not be used to purchase gift cards.

D.  At no time may the Principal Investigator (PI) or any MTSU employee use a gift card for personal use.

IV. Request to Use Gift Cards as a Research Incentive

A.  A request, in the form of a memo from the PI, for the purchase of research incentive gift cards must be submitted for prior approval to the Office of Research Services (ORS). The request for gift cards should contain the following information:

1.  Sponsored research program to be used as the source of funding;

2.  IRB number;

3.  Justification or reason(s) for the gift card(s);

4.  The number and denomination of card(s) needed, and the methodology used in determining the amount requested;

5.  Name of custodian;

6.  An explanation of how the card(s) will be safeguarded; and,

7.  The method of record keeping for tracking card distribution.

B.  Accounting Services should be contacted for instructions on where and how to purchase gift cards.

V. Distribution of Cash or Gift Cards to Research Participants

A.  Cash or traditional gift cards should be hand delivered to research participants, whenever possible, and not sent through the mail. With the exception of mail surveys, if participant payments must be mailed, the preferred method is to process a check or direct deposit through Accounts Payable.   

B.  If the combined total value of gift cards received, and compensation for services rendered, exceeds six hundred dollars ($600.00) in any calendar year for a non-employee, a Form 1099-MISC will be issued and income reported to the IRS.

C.  The gift card log, with the participant’s tax reporting information, should be submitted to Accounting Services immediately at the end of the research project, or prior to the end of each calendar/payroll year, if the project end date is later. Payments made during a calendar year must be received by Accounting Services no later than December 15 in order to meet the 1099 tax reporting deadline. in accordance with regulations.

Forms: 

Procedures for Safeguarding and Accounting for Cash and Gift Cards in Research Studies

Revisions: none.

Last Reviewed: March 2022.

References: none.