Our company started a wellness program this year that gave employees prizes for completing certain steps of the program. None of these items were cash or cash equivalent fringe benefits. They were water bottles, tshirts and gym bags. What is the maximum dollar amount to be considered de minimus?

What is the maximum dollar amount to be considered de minimus?

Per IRS, no such thing. IRS is very clear that there is no "maximum dollar amount" in regards to De Minimus. Very basically.
- Cash and near cash equivalents such as most gift certificates are never De Minimus.
- Non-cash is complicated. One is legally required to look at the fair market value (FMV) of the gift and then compare that the tracking cost.

Example #1. We buy 1,000 company logo coffee cups at $10/hr to give to customers. We also start giving them one each to employees who want them. We can make a pretty good argument that the additional tracking cost of these already purchased items is high in comparison to the FMV. This is probably a De Minimus transaction under IRS rules.

Example #2. Jane is the employee of the month, and we specifically buy Jane a customized coffee cup for $10. Even though both types of coffee cups cost exactly $10, we know darn well that Jane is going to get the coffee cup before we bought it. This is not a De Minimus transaction per IRS.

Example #3. We buy 1,000 Hummers at $100K each to give to customers. We also start giving the extras to employees who want them. There is no possible argument that we can make that the additional tracking cost of these already purchased items is too high in comparison to the FMV. This is not a De Minimus transaction under IRS rules.

IRS has made it very, very, very clear that there will never be a magic number where all gifts smaller then the magic number will be non-taxable and all gifts larger then the magic number will be taxable. IRS has made it very clear (often in court) that De Minimus is always a function of both tracking cost and FMV of the gift and that the employer has to convince IRS that the tracking cost is too high in comparison to the FMV.