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Welcome. Personal Payments Training 2008. Personal Payments New Personal Payment Process Signature Delegation Form PC Form RCS Glacier Software Non-Resident Alien Payments. Living Allowances Scholarships & Fellowships Prizes & Awards Receipt Guidelines

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welcome
Welcome

Personal

Payments

Training

2008

agenda
Personal Payments

New Personal Payment Process

Signature Delegation

Form PC

Form RCS

Glacier Software

Non-Resident Alien Payments

Living Allowances

Scholarships & Fellowships

Prizes & Awards

Receipt Guidelines

Independent Contractor vs. Employee

Contacts & Reference Materials

Agenda
personal payments
Personal Payments
  • Consulting, Honoraria, Fees, etc.
  • Form PC Required
    • SSN
    • Home Address
    • Period Covered
    • Brief Explanation of Services
    • Fees and expense reimbursements must be on separate lines on the Invoice Voucher for IRS reporting
    • Form 52A – request for electronic funds transfer
      • Preferable payment method for payment going outside the US
      • Route Form 52A & all backup through Cheryl Byers, Taxes
      • Name & SSN must be on Form 52A
personal payments4
Personal Payments
  • Additional Instructions for Non-Residents
  • Glacier Software has replaced the 2nd page of the Form 1&2
  • Attach copies of supporting documentation
    • Passport
    • Visa Page
    • I-94 Card
    • I-20(F1)
    • DS-2019(J1)
    • I797(H1B)
  • 8233 Form (if applicable)
  • W-7 Form (if applicable)
personal payments5
Personal Payments
  • Lives and Works Outside the US
    • If a Non-Resident Alien lives and works outside of the US, Purdue has no tax withholding or reporting responsibilities.
    • Notate in the description box on the Invoice Voucher that the individual lives and works outside of the US.
    • Retain documentation in the business office that supports the work was done outside of the US.
personal payments6
Personal Payments
  • One-Stop Shop for Personal Service Payments
    • Reduce processing time
    • Prevent duplication of effort
    • Document review will occur one time
    • All questions answered in one department
signature delegation
Signature Delegation
  • Authority to sign for the procurement of goods and services – except for payments to individuals
  • Comptroller/SPS Review
    • Allowability
      • Conformity to restrictions imposed by state regulations
      • Meet restrictions imposed by donor, external provider and the University
      • Meet restrictions imposed by the federal government, OMB Circulars A-21, A-110
      • Meet restrictions placed on specific grants or contracts
signature delegation9
Signature Delegation
  • Comptroller/SPS Review (cont.)
    • Allocable
      • Authority to commit funds
      • Benefit the funding sources
      • Funds are available
    • Reasonable & Necessary
      • Quantity and Price are considered appropriate by a prudent person
      • Necessary to conduct the work of the office or department
signature delegation10
Signature Delegation
  • Departmental Review
    • Account number is valid
    • Funds are available
    • Correct object code & DREF (if applicable)
    • Visa issues for personal travel payments checked
    • Appropriate documentation is attached
    • Academic approvals
    • Comptroller review – allocable, allowable, reasonable, signature
    • Route to Tax Department
signature delegation11
Signature Delegation
  • Payments to Individuals
    • Honorariums, Consulting Fees, Reimbursements, etc
    • Reviewed by Business Office for allowability, allocability & reasonableness
    • Sign under ‘Recommended’ (based on limit)
    • If a Form PC is needed, review with scrutiny, any questions contact the Tax Department
    • Forward to the Tax Department
form pc payee certification
Form PC-Payee Certification
  • Start using 07/05 version immediately
  • Replaces Form 1&2
  • Available on the Taxes Website
  • Non-Residents, who are receiving compensation and are not current employees, need to complete Glacier
  • The tax department will use this information to accurately withhold and report taxes
form rcs consulting agreements
Form RCS-Consulting Agreements
  • Consultant Payments
    • Duration of Service is greater than 20 days
    • Multiple payments paid to consultant
    • Complete and forward to the Tax Department
form pc rcs
Form PC & RCS
  • Business Office Guidelines can be found on the Taxes website as part of the consultant payments tab
  • A Quick Reference Guide for Form PC & RCS is also available on the Taxes website as part of the consultant payments tab
  • http://www.purdue.edu/taxes/Consultant_Payments/Welcome.html
glacier
GLACIER
  • Glacier is a web based International tax compliance system.
  • Instead of handing out tax forms to international visitors, you will be issuing them passwords.
glacier18
GLACIER
  • Business office procedure to receive access to issue passwords; e-mail the Tax Department the following information:
    • Name
    • Title
    • Campus address
    • Campus phone and fax number
    • E-mail address
  • You will receive an e-mail with your password and instructions on how to login. The e-mail will come from support@online-tax.net and not Purdue.
glacier19
GLACIER
  • When you issue a password, an e-mail is sent to the visitor asking them to enter their information into the Glacier system. The e-mail will come from support@online-tax.net and not Purdue. Please advise them to look for this e-mail and others in the future.
  • Advise them to keep the password and instructions for future use of the Glacier system.
glacier20
GLACIER
  • After the visitor enters their information, a Tax Summary Report, and any other required IRS forms will be available to print. Ex) 8233, W-8BEN, or W-7. The Tax Summary Report will replace the NRA-100.
  • If the visitor does not have a social security number or an ITIN, Glacier will put a hold on printing the forms for that visitor. The Tax Department can override the hold and print the forms when the employee is in our office. The business office needs to contact the Tax Department to override the hold which enable the visitor to print the forms.
  • The Tax Department will process the ITIN application upon receipt of the payment request.
glacier21
GLACIER
  • We will use Glacier to generate the tax forms required for payments to individuals receiving personal service payments, scholarships, awards, royalty payments, or reimbursement of travel expenses via invoice vouchers. The Tax Summary Report printed from Glacier will replace the NRA-100.
glacier22
GLACIER
  • Fellowship recipients will also be using this system.
  • For the payments above, check the Non-Employee box for Pay Period type when you are issuing a password.
  • If you have an incoming visitor having difficulties printing, offer to print the forms for them when they arrive in your office.
non resident alien visas
Non Resident Alien Visas
  • Not all Visas are the same
  • Try to choose the appropriate visa for an individual before they come to the US
  • There are different restrictions for paying compensation and for reimbursing travel expenses
  • Refer to the visa payment reference sheets
visa types
B-1 - Visitor Business

B-2 - Visitor Tourist

WB - Visa Waiver Business

WT - Visa Waiver Tourist

F – Student

J – Exchange Visitor

H-1B – Specialty Worker

TN – NAFTA Professional (Canada or Mexico)

EAD – Employment Authorization Card

Visa Types
noteworthy restrictions
Noteworthy Restrictions
  • B-1 / B-2 and WB / WT
  • Limited to 9 days of service at Purdue and cannot have been paid or reimbursed expenses at more than 5 institutions in the past 6 months (9-5-6 Statement)
  • Must sign 9-5-6 statement printed from Glacier
noteworthy restrictions29
Noteworthy Restrictions
  • Exception: B-1 and WB can be reimbursed expenses for greater than 9 days if they are not receiving an honorarium. In this case they do not have to sign the 9-5-6 statement.
  • Must have I-94 card with B-1 or WB indicated
  • The visitor must stop at the border or point of entry and request the I-94 card be marked B-1 or WB
  • If B-1 or WB is not marked on the I-94 card, the 9 day limit applies
noteworthy restrictions30
Noteworthy Restrictions
  • H-1B, F-2, TN, and O-1 visas cannot be paid honorarium/fee for services
  • H-1B, TN, and O-1 are employment visas that are employer specific, job specific, and site specific.
  • If Purdue is not the sponsor of the individual, then approval from the sponsor may be needed before the payment can be made.
paying an institution directly
Paying an Institution Directly
  • If you want to pay an H-1B, TN, or O-1 a fee or reimburse expenses, you can pay their sponsoring institution directly.
  • Ask the sponsor to send an invoice to Purdue and pay it on a direct Invoice Voucher through A/P.
    • Contact SPS for guidance on their accounts.
  • The sponsor then passes along the fee to the individual and they are responsible for tax withholding and reporting.
slide32

I-94 card

F-1, D/S = Duration of Stay (J-1 also D/S)

TN - Date specific (H-1 also date specific)

what is a tax treaty
What is a Tax Treaty?
  • Treaties between the US and other countries are negotiated. They allow for certain types of income to be exempt from tax.
  • There are many articles (categories) in a tax treaty. Some of the common articles we use are an exemption from tax for employee compensation, scholarship and fellowship payments, independent contractor payments, prizes and awards, and royalty payments
what is a tax treaty35
What is a Tax Treaty?
  • Some countries have an exemption from tax withholding for all categories of income and some may only have negotiated an exemption for independent contractor payments for example.
  • Please check the tax treaty charts on our website for a current listing of countries exempt from tax under each income type.
  • Glacier will indicate the allowability of the Canadian treaty, however, Purdue University does not honor the Canadian tax treaty; the individual can collect the treaty on their annual return.
irs form 8233
IRS Form 8233
  • This form will print from Glacier if applicable
  • We must have an original signature to grant exemption
  • Must have a Social Security Number or Individual Taxpayer Identification Number
  • Listing of countries with tax treaties is on the taxes website (http://www.purdue.edu/taxes/pdf/treatlim.pdf)
irs form w 7
IRS Form W-7
  • Used to apply for ITIN (Individual Taxpayer Identification Number)
  • The IRS will issue an ITIN to anyone not eligible to receive a SSN
  • Copies, of supporting documentation will be listed on the Tax Summary printed from Glacier, should be forwarded with the invoice voucher or wire transfer request to Cheryl Byers.
irs form w 739
IRS Form W-7
  • The tax dept. will send the W-7 into the IRS and follow for the issuance of a number
  • Anyone receiving any type of payment should have a SSN or ITIN
  • If an individual does not have an ITIN, the maximum tax withholding of 30% will be withheld
  • Until an ITIN or an SSN is received by the tax department, no tax treaty will be honored and the maximum tax withholding of 30% will be withheld from all payments
travel reimbursement
Travel Reimbursement
  • WT and B-2 visa holders are limited to 9 days reimbursement and must sign the 9-5-6 statement.
  • Form PC
    • NRA (Glacier)
      • Copy of I-94 Card
      • Refer to reimbursement of travel expense for NRA
  • Original Receipts
  • CONUS Subsistence Rate
    • http://www. purdue.edu/travel/subsistence/welcome.html
  • Sales Tax is Reimbursable to Consultants/Visitors
prospective employees
Prospective Employees
  • We can reimburse expenses for trips to interview for any visa type on non-resident aliens.
  • Follow the travel department’s reimbursement policy.
  • Form 17C is required.
living allowances
Living Allowances

Key Question to ask: Is the person

PERFORMING SERVICES

(Whether paid fee or not)

versus

FELLOWSHIP

(For the benefit of the individual, to further their education or training)

living allowances44
Living Allowances

PERFORMING SERVICES

  • Reimburse expenses using the Travel Department’s policies. Paying subsistence is allowable
  • Payments of rent for temporary assignments (less than one year) should be paid directly to the vendor, but still need to be processed through the tax department
  • Any amount above allowable expenses is included in income.
living allowances45
Living Allowances

FELLOWSHIP – No Services Provided

- US Citizens, Resident Aliens, and Resident for Tax Purposes

  • Receipts are not needed
  • No tax withholding by Purdue
  • Individual includes payment in taxable income on their tax return
  • No tax document issued by Purdue
living allowance
Living Allowance

FELLOWSHIP – No Service Provided

- Non-Resident for Tax Purposes

  • Individual needs to be in Glacier
  • Receipts are not needed
  • SSN or ITIN required
  • Signed IRS Form W-8BEN needed (printed from Glacier)
  • Attach a Copy of I-94 card, visa page, and I-20 (for F-1) or DS-2019 (for J-1)
  • Reported to the IRS on a 1042-S Form
  • Glacier will indicate the availability of a treaty
scholarships and fellowships
Scholarships and Fellowships
  • An amount given to an individual to aid in the pursuit of study, training, or research
  • Cannot be a payment for services
  • Grantor specifically intends money be spent to defray costs of study, training, or research
  • Processed through the Division of Financial Aid (DFA) for currently enrolled students
scholarships and fellowships49
Scholarships and Fellowships
  • Scholarships, Fellowships, and Training Grants for students not currently enrolled
    • US Citizens, Resident Aliens, and Resident for Tax Purposes
      • Need SSN
      • Not Reportable to the IRS by Purdue
      • Individual will receive scholarship letter with payment
scholarships and fellowships50
Scholarships and Fellowships

Non Resident for Tax Purposes

  • Glacier will determine taxability and forms required
  • SSN or ITIN required
  • Form PC
  • W-8BEN Form Required (print from Glacier)
  • Attach copies required by the Glacier Tax Summary; These could include a copy of the I-94 card, visa page, and I-20(F1) or DS-2019(J1)
  • Reported to the IRS on a 1042-S Form
scholarships and fellowships51
Scholarships and Fellowships
  • If eligible for a treaty
    • 0% tax withheld
  • If not eligible for a treaty
    • F-1 or J-1 visa holder – 14% tax withheld
    • Other visa type – 30% tax withheld
  • Countries with treaties (tax withholding exemptions) can be found on our website (http://www.purdue.edu/taxes/pdf/treatlim.pdf)
prizes and awards
Prizes and Awards
  • Currently enrolled students must go through DFA
  • All others paid through Accounts Payable
  • An amount received primarily in recognition of a special achievement or is the result of entering a contest.
  • Ex.) Poster contest
  • Grantor does not specifically state how the money should be spent.
prizes and awards53
Prizes and Awards
  • US Citizens
    • Need SSN & Home Address
    • Form PC Required
    • Report to IRS on a 1099-MISC
  • Note: If award is directly related to job performance, must be processed through Payroll.
prizes and awards54
Prizes and Awards
  • Non Resident Aliens
      • SSN or ITIN Required
      • Form PC
      • Use Glacier to determine forms required
      • W-8BEN Form Required
      • Attach copies of supporting documentation
        • I-94 card
        • Visa page
        • I-20 (F1)
        • DS-2019 (J1)
      • Report to the IRS on a 1042-S Form
      • Tax withheld at 30% without regard to a tax treaty
cash advances
CASH ADVANCES
  • Common uses for Cash Advances
    • Human Subject payments (under $50)
    • Business or Consultant expenses in country outside U.S. (Use credit card when possible)
  • PRF handles cash advances for employee travel
  • Call the Tax Group for assistance
    • Cheryl Byers, phone 49-41165
human subjects
Human Subjects
  • A separate Invoice Voucher is required for each payment to a non-resident. We have tax withholding and reporting requirements.
  • If the non-resident is not a current employee, please have them complete Glacier
  • Copy of the Human Subject procedures is on the Taxes website under the Human Subjects heading. (http://www.purdue.edu/taxes/Human_Subjects/)
receipt guidelines
Receipt Guidelines
  • Original itemized receipt required
  • Receipt must show paid in full or proof of payment is needed
  • Cannot reimburse for alcohol
  • Receipts for travel reimbursement under $75 not required, except hotel
  • Airline receipt must be the ‘Passenger Receipt’ with the fare amounts noted
receipt guidelines59
Receipt Guidelines
  • Any international receipt must be converted to US dollars, unless being reimbursed in foreign dollars
  • If receipt is unavailable from vendor, use the missing receipts form (on an exception basis only) Travel Form 17MR (http://www.purdue.edu/travel/xls/missingreceipt.xls)
worker classification determination
Worker Classification Determination
  • “High Profile” Audit Issue
  • Employee and Independent Contractor defined
  • Application of facts and circumstances – Right to Control
behavioral control how the work is done
Behavioral Control – How the Work is Done
  • Instructions
    • How, when, where to do the work
    • What equipment or tools to use
    • What assistants to hire
    • Where to purchase supplies and services
  • Training
    • Required procedures and methods
    • Work needs to be done a certain way
financial control business aspects of the work
Financial Control – Business Aspects of the Work
  • Significant Investment
  • Reimbursement of Business Expenses
  • Opportunity for Profit or Loss
relationship of the parties
Relationship of the Parties
  • Employee benefits
  • Essential to daily operations
  • Continuing relationship
  • Written contracts
employee vs independent contractor
Employee vs. Independent Contractor
  • Withholding Requirements
    • Employee: FIT, FICA, Medicare
    • Independent Contractor: None
  • Reporting Requirements
    • Employee: W-2
    • Independent Contractor: 1099-MISC
contacts
Contacts
  • Cheryl Byers – Personal Service Payments
    • 41165 cmbyers@purdue.edu
  • Pam Hartman – Non-Payroll Tax Accountant
    • 47921 phartman@purdue.edu
  • Linda Mundy – Tax Manager
    • 40521 lsmundy@purdue.edu
references
References
  • All of the forms discussed today can be found on the Taxes Website
  • www.purdue.edu/Taxes/