We are having a discussion with our premium vendor over the interpretation of Rev. Proc. 2000-30 and what needs to be included when determining the IRS de minims rule for "total cost" to the bank for the premium items. I’ve always had the understanding that the "cost" to the financial institution includes the shipping and handling charges. Implying that the bank has to keep the total cost, including freight, under $10.00 for deposits of less than $5,000 and under $20 for deposits of $5,000 or greater.

Our vendor says that they have “200 banks” that are purchasing premiums with a value at the de minims value before shipping and handling and that I have "misinterpreted the issue." I have confirmation from two attorneys, the experts at RSM McGladrey, Inc, which is a financially consulting firm, and the IRS. All agree that the cost, including freight, to the institution is what constitutes whether or not the premium falls within the "de minis" rule of the IRS.

I would like to know what others are doing. Our marketing area wants to know if part of the price of the item can be shifted to “consulting fees” of the vendor, if that would allow us to continue to uses these items. I’ve never had such headaches over bake wear and binoculars. I appreciate your opinions.

Your definition and those of the experts seems to hold true with my understanding. I base a lot of this on what we have followed for years, such as Reg. Q, §217.101 Premiums on deposits.
(3) the value of the premium or, in the case of articles of merchandise, the total cost (including taxes, shipping warehousing, packaging, and handling costs) does not exceed $10 for deposits of less than $5,000 or $20 for deposits of $5,000 or more.

Hmmm. Let see. Only the vendor standing to profit sees this differently.

I think you are wise to verify this sales pitch. You have consultants, counsel AND the IRS saying you are correct. I can tell you how I'd go.

Thank you for your quick response. Would you consider "consulting fees" as separate from the "total cost" of the premium? Personally I'm afraid that I'm walking on the wire with even the consideration of it, but you gotta try to keep marketing happy.

From a documentation standpoint the costs may be added up and seen to comply or not. Additional services for consulting would be separate if they exist because they made recommendations, etc. as part of the service. The two would not be added together, in my mind, but would need to be clearly separated.

One may ask if this is the kind of company you'd really want to do business with though, if they are in fact taking shipping costs to zero and consulting fees to whatever shipping used to be.

Figures don't lie, but liars figure.