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Accounts Payable Disbursements Training

Dec-11. DAY TWO Taxable Payments Made through the Vendor System. 2. Agenda. DAY TWO(Today)Taxable Payments Made Through the Vendor SystemReview: General Disbursements IssuesIndependent Personal Services PaymentsVendor Payments with Income Tax ImplicationsCalifornia Non-Wage Tax WithholdingTaxation of Scholarship / Fellowship GrantsNonresident Alien Tax Issues.

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Accounts Payable Disbursements Training

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    1. Accounts Payable & Disbursements Training _____________________________________________________________ DAY TWO Taxable Payments Made Through the Vendor System ______________________________________________________________ Asger Pedersen Accounting Services & Controls

    2. Dec-11 DAY TWO Taxable Payments Made through the Vendor System 2 Agenda DAY TWO (Today) Taxable Payments Made Through the Vendor System Review: General Disbursements Issues Independent Personal Services Payments Vendor Payments with Income Tax Implications California Non-Wage Tax Withholding Taxation of Scholarship / Fellowship Grants Nonresident Alien Tax Issues

    3. Dec-11 DAY TWO Taxable Payments Made through the Vendor System 3 Class Focus AWARENESS – Policies, Procedures, Responsibilities PROCESSES – serving stakeholders TOOLS – providing user functionality Ask questions!

    4. Dec-11 DAY TWO Taxable Payments Made through the Vendor System 4 Review: General Disbursements Issues The Essentials Accounting looks for evidence of both Authorization and Approval No payment transaction should lack appropriate authorization, approval and substantiating documentation See discussion at PAYMENT PROCESSING AT UCSB: OVERVIEW at following web link: http://www.accounting.ucsb.edu/pdf/ap_overview.pdf

    5. Dec-11 DAY TWO Taxable Payments Made through the Vendor System 5 Review: General Disbursements Issues All payment requests must evidence Authorization — a commitment By an authorized individual (PI’s, LV buyers, Purchasing, Contracts & Property Office) In the form of a requisition, purchase order, contract, agreement or letter of understanding Approval — an acknowledgement By a departmental approver (signer with authority to disburse from the budget in question) In the form of an invoice or payment request referencing a valid authorization

    6. Dec-11 DAY TWO Taxable Payments Made through the Vendor System 6 Review: General Disbursements Issues Relationships & Compliance Issues All payment requests … Infer a contractual relationship Buyer/Seller – common goods & services Employer/Employee – dependent personal services Client/Service provider – independent persnl servcs Raise tax compliance issues Sales/Use tax – common goods & services Income tax reporting – dependent and independent personal services providers Income tax withholding – as triggered by taxpayer’s status (residency, entity type, back-up withholding)

    7. Dec-11 DAY TWO Taxable Payments Made through the Vendor System 7 Review: General Disbursements Issues The Different Types of Services Payments for common goods & services Under Low Value (LV), Vendor Blanket (VB) or High Value (SB) authorizations Payments for personal, professional services Requiring Payroll processing or Letter of Understanding (LE), Business Services Contract (CT) or High Value Purchase Order (SB) See discussions at PAYMENT PROCESSING AT UCSB: SELECTED TOPICS at following web link: http://www.accounting.ucsb.edu/pdf/ap_payment_process_selected.pdf

    8. Dec-11 DAY TWO Taxable Payments Made through the Vendor System 8 Independent Personal Services Payments Governing U.C. Policies The following are links to relevant UC policies BFB* BUS-43, Materiel Management http://www.ucop.edu/ucophome/policies/bfb/bus43.html BFB* BUS-77, Independent Contractor Guidelines http://www.ucop.edu/ucophome/policies/bfb/bus77pdf.html BFB* BUS-34, Securing the Services of Independent Consultants http://www.ucop.edu/ucophome/policies/bfb/bus34.html *Business and Finance Bulletins (BFB) See also Summary of Authorizations Required for Approval at http://www.accounting.ucsb.edu/pdf/AP_summary_of_auths_for_payment.pdf

    9. Dec-11 DAY TWO Taxable Payments Made through the Vendor System 9 Independent Personal Services Payments Local Policy Administration Contracts & Property or Purchasing units Authorizes contracts for services Links to forms, guidance, policies http://www.busserv.ucsb.edu/contractsproperty/index.htm http://www.busserv.ucsb.edu/purchasing/index.htm Accounting Services & Controls Processes contract payments Links to forms, guidance, policies http://www.accounting.ucsb.edu/disbursement/forms.shtml

    10. Dec-11 DAY TWO Taxable Payments Made through the Vendor System 10 Independent Personal Services Payments Authorizing Services Contracts You do not have the authority to sign contracts on behalf of UC unless delegated to you by Regents/Chancellor/campus Materiel Manager Must go through Contracts & Property office No agreements should be executed outside established policy and procedure parameters Know contract authorization vehicles and limits No services should be performed without a fully executed Letter of Understanding (LE), Purchase Order (SB), or Business Services Contract (CT) Violations could result in personal/institutional liabilities

    11. Dec-11 DAY TWO Taxable Payments Made through the Vendor System 11 Independent Personal Services Payments Authorizing Services Contracts Tools and guidance at the Purchasing / Contracts & Property web sites Request for Independent Consultant Services http://www.busserv.ucsb.edu/Forms/ConsultantRequest.pdf Request for Personal or Professional Services Agreement http://www.busserv.ucsb.edu/Forms/RequestforService.pdf CONTACTS: Julie Sears, Materiel Manager, julie.sears@buss.ucsb.edu, x2585 Randy Stoskopf, Contracts & Property Administrator, randall.stoskopf@purc.ucsb.edu, x3001

    12. Dec-11 DAY TWO Taxable Payments Made through the Vendor System 12 Independent Personal Services Payments Status Determination per BFB BUS-77 Employee status Employer controls results, methods and means Non-employee status Employer controls only the results Status determination tools Independent Contractor Pre-hire Worksheet, Exhibit D http://www.ucop.edu/ucophome/policies/bfb/bus34a3.pdf See also Purchasing’s Relationship Determination Table http://www.busserv.ucsb.edu/purchasing/goods_services/indepcontractors_psa.htm

    13. Dec-11 DAY TWO Taxable Payments Made through the Vendor System 13 Independent Personal Services Payments Services Definitions from BFB BUS-43 Common goods and services – Standard supplies and services readily obtainable through conventional commercial channels (covered in DAY ONE class) Personal services – infrequent, technical, or unique functions performed by an independent contractor Usually an individual, perhaps part-time For example; translation, technical editing or appraisal Professional services – infrequent, technical, and/or unique functions by an independent contractor In an occupation rendering such services full time, often partnerships, firms, corporations For example; medical, engineering, performing arts, management consultation

    14. Dec-11 DAY TWO Taxable Payments Made through the Vendor System 14 Independent Personal Services Payments Services Definitions from BFB BUS-43 Independent contractor – A relationship where the University controls only the result, not the manner of performance Independent consultant – When the University controls neither the result not the manner of performance Competence to provide professional or technical advice ALL BUT #1 REQUIRE INCOME TAX REPORTING See also the Payment Processing under Contracts for Independent Personal Services discussion at the following web link http://www.accounting.ucsb.edu/pdf/ap_payment_process_selected.pdf

    15. Dec-11 DAY TWO Taxable Payments Made through the Vendor System 15 Independent Personal Services Payments The Purpose of a Contracts for Services Documents scope – Who, what, when, where and why Documents purpose – What project, what mission and funding source Documents expectations – Outcome, output for how much compensation Documents risk – How much risk and who assumes it

    16. Dec-11 DAY TWO Taxable Payments Made through the Vendor System 16 Independent Personal Services Payments Contract Vehicles / Limits Letter of Understanding (LE) — low dollar, simple event, very low risk Speakers, trainers, workshop facilitators Cannot exceed $1,500 for one-time event Very low risk, off-campus or on-campus with UCSB providing facilities, equipment See How to Hire Speakers & Trainers (non-academic activities) at Contracts & Property web page http://www.busserv.ucsb.edu/contractsproperty/speakers_trainers.htm#instructions

    17. Dec-11 DAY TWO Taxable Payments Made through the Vendor System 17 Independent Personal Services Payments Contract Vehicles / Limits Purchase order (SB) – simple event, very low risk Speakers, trainers, workshop facilitators exceeding $1,500 but not over $10,000 Contracts (CT) – any risk level If over $10,000, even if very low risk Any amount: if higher risks, unique require-ments (catering, props, equipment) Consultants – All, no matter the amount Contractors – Professional, unique skills See links to Campus Catering Policy and Guidelines http://www.ehs.ucsb.edu/units/envhlth/ehrsc/caterguide.htm http://www.policy.ucsb.edu/housing-svcs/newfoodpolv41.pdf

    18. Dec-11 DAY TWO Taxable Payments Made through the Vendor System 18 Independent Personal Services Payments HONORARIA—UNIQUE STATUS In recognition of special services or distinguished achievements for which custom forbids a fixed price Person with academic credentials in academic setting Approval by department heads, deans or Chancellor required No local policy statement, but local approval limits apply See AMC* D-371-35, Disbursements: Honorarium Payments http://www.ucop.edu/ucophome/policies/acctman/d-371-35.pdf *Accounting Manual Chapter

    19. Dec-11 DAY TWO Taxable Payments Made through the Vendor System 19 Independent Personal Services Payments OTHER PAYMENT PROCESSING TYPES Undergraduate Research Grants Prizes, Awards and Gifts Stipend Payments Leases and Contract Payments Settlement Payments Home-Stay Payments For detailed discussions of above topics see Selected Topics at this web link: http://www.accounting.ucsb.edu/pdf/ap_payment_process_selected.pdf

    20. Dec-11 DAY TWO Taxable Payments Made through the Vendor System 20 Independent Personal Services Payments Responsibilities When Procuring Personal Services Campus departments Initiate procurement process by submitting relevant data and required forms Contract & Property (Business Services) Administers processes for requisitioning services, executing contracts Accounting Services & Controls On the basis of data supplied, properly tax codes payment transactions

    21. Dec-11 DAY TWO Taxable Payments Made through the Vendor System 21 Independent Personal Services Payments Questions

    22. Dec-11 DAY TWO Taxable Payments Made through the Vendor System 22 Vendor Payments with Income Tax Implications Who is Tax-Reportable? — Exempt? Reportable: vendor system compensation to individuals and sole proprietors Exempt: generally corporate entities because they are “fully audited” AMC* D-371-12.1, Disbursements: Accounting for and Tax Reporting of Payments Made Through the Vendor System http://www.ucop.edu/ucophome/policies/acctman/d-371-12-1.pdf How to tell the difference: Payers expected to certify vendors on IRS Form Disclose TIN and residency/immigration status Certify to back-up withholding status W-9, Request for Taxpayer Identification Number & Certification http://www.irs.ustreas.gov/pub/irs-pdf/fw9.pdf

    23. Dec-11 DAY TWO Taxable Payments Made through the Vendor System 23 Vendor Payments with Income Tax Implications Tax Reporting Elements on Form-5 Compliance questions: UC Employee? If “Yes”, provide justification for non-payroll treatment. UCSB Student? If “Yes”, ( ) undergraduate? or ( ) graduate? or ( ) non-degree candidate? Independent Service Provider/Consultant? If “Yes”, ( ) individual/partnership? or ( ) incorporated entity? California Nonresident? If “Yes”, is work performed in California? ( ) Yes, ( ) No Nonresident Aliens? If “Yes”, is work performed in US? ( ) Yes, ( ) No Taxpayer Identification Number (TIN) See form and instructions at http://www.accounting.ucsb.edu/forms/form5.shtml

    24. Dec-11 DAY TWO Taxable Payments Made through the Vendor System 24 Vendor Payments with Income Tax Implications Tax Reporting Elements on Form-5 Tax coding accuracy requires Description of nature of transactions Correct disclosure of payee status Disclosure of location of activity Types of TIN (Taxpayer Identification Number): Social Security Number (SSN) issued by SSA Employer Identification Number (EIN) issued by IRS Individual Taxpayer Identification Number (ITIN) issued by the IRS

    25. Dec-11 DAY TWO Taxable Payments Made through the Vendor System 25 Vendor Payments with Income Tax Implications Taxable/Reportable —Travel* Moving Expenses Unrecovered Travel Advances Unsubstantiated Travel Expenses Discount, Rebate, or Premium Coupons on Transportation Tickets Unsubstantiated Travel Expenses incurred by Independent Contractor/Consultant See also BFB** G-28, POLICY AND REGULATIONS GOVERNING TRAVEL http://www.ucop.edu/ucophome/policies/bfb/g28toc.html *Per tables in AMC* D-371-12.1 **Business and Finance Bulletin

    26. Dec-11 DAY TWO Taxable Payments Made through the Vendor System 26 Vendor Payments with Income Tax Implications Tax Exempt Items—Travel* Per Diem for Foreign Travel Actual Travel Expenses for following expenses Spouse on University business Pre-employment (PE) Interview and spouse accompanying on PE interview Rendering charitable service to University Accepting a non-reportable prize or award Independent Contractor/Consultant Subsistence for travel assignments of more than one year See also BFB** G-28, POLICY AND REGULATIONS GOVERNING TRAVEL http://www.ucop.edu/ucophome/policies/bfb/g28toc.html *Per tables in AMC* D-371-12.1 **Business and Finance Bulletin

    27. Dec-11 DAY TWO Taxable Payments Made through the Vendor System 27 Vendor Payments with Income Tax Implications Taxable/Reportable – Other Payments* Fees for Professional Services (Resident or Non-Resident Alien) Payments to attorneys for legal expenses Health care commissions to non-employees Damage payment - services prior to signing loyalty oath Rent, Royalties Prizes and awards to Faculty Prizes and awards to employees – cash Prizes and awards to non-employees Uniform allowance (under a non-accountable plan – lump sum allowances) Human subject payments *Per tables in AMC* D-371-12.1

    28. Dec-11 DAY TWO Taxable Payments Made through the Vendor System 28 Vendor Payments with Income Tax Implications Tax Exempt Items – Other Payments* Lease purchase agreement payments Overtime meals Employee non-cash award expenditures Uniform allowance or reimbursement (under an accountable plan – business connection, substantiation, return of excess amounts ) Vendor system settlement payments *Per tables in AMC* D-371-12.1

    29. Dec-11 DAY TWO Taxable Payments Made through the Vendor System 29 Vendor Payments with Income Tax Implications Responsibilities

    30. Dec-11 DAY TWO Taxable Payments Made through the Vendor System 30 California Non-Wage Tax Withholding Overview and References CA Non-Resident Income Tax Withholding Factors On non-wage compensation for services performed in California by California nonresidents Applies to residents of foreign countries performing services in California California does not recognize foreign tax treaties AMC D-371-77, Disbursements: State Tax Withholding from Nonwage Payments to Nonresidents of California http://www.ucop.edu/ucophome/policies/acctman/d-371-77.pdf See following State of California Franchise Tax Board Publications, Guidelines for Determining Resident Status http://www.ftb.ca.gov/forms/misc/1031.pdf

    31. Dec-11 DAY TWO Taxable Payments Made through the Vendor System 31 California Non-Wage Tax Withholding California Non-Resident Status Determining California Non-Resident Status Individuals – less than nine months of year in California Corporations, Partnerships, LLC’s NOT organized or existing under laws of the State NOT qualified by Secretary of State to transact business in California

    32. Dec-11 DAY TWO Taxable Payments Made through the Vendor System 32 California Non-Wage Tax Withholding Income Tax Withholding—Performing Entities Entertainment – Payments to performing entities (Dept. of Arts & Lectures) See Nonresident Withholding—Entertainment Guidelines http://www.ftb.ca.gov/forms/misc/1024.pdf Tax Withholding Procedures—performers Payments subject to 7% withholding if total gross is over $1500 for tax year Waiver or reduced rate may be requested from State Franchise Tax Board Approval or denial provided on Form 595 – attach if applicable

    33. Dec-11 DAY TWO Taxable Payments Made through the Vendor System 33 California Non-Wage Tax Withholding Income Tax Withholding—General General – fees for professional services, consulting, conducting seminars, prizes, awards, royalties Payee may submit Nonresident Withholding Waiver Request http://www.ftb.ca.gov/forms/02_forms/02_588.pdf?75622 Tax Withholding Procedure—general Payments subject to 7% withholding if total gross is over $1500 for tax year Request waiver or reduced withholding on Form 588 The FTB will issue a determination letter – must be attached

    34. Dec-11 DAY TWO Taxable Payments Made through the Vendor System 34 California Non-Wage Tax Withholding Income Tax Withholding—Corporations Corporate (also partnerships and LLC’s) – Payments to such entities with no permanent place of business in state Corporations may execute a Withholding Exemption Certificate http://www.ftb.ca.gov/forms/02_forms/02_590.pdf?75622 Tax Withholding Procedure—corporate entities Payments subject to 7% withholding if total gross is over $1500 for tax year Request waiver or reduced withholding on Form 590 The FTB will issue a determination letter – must be attached

    35. Dec-11 DAY TWO Taxable Payments Made through the Vendor System 35 Taxation of Scholarship / Fellowship Grants Degree vs. Non-Degree Candidates DEFINITIONS Degree Candidate – Undergraduate and graduate students including full and part-time students who are merely attending an accredited educational institution authorized to provide a bachelor or higher degree Non-Degree Candidate – Post-doctoral fellow or a student enrolled in a “certificate” program AMC* T-182-77, Taxes: Taxation of Scholarship and Fellowship Grants and Educational Assistance http://www.ucop.edu/ucophome/policies/acctman/t-182-77.pdf * Accounting Manual Chapter

    36. Dec-11 DAY TWO Taxable Payments Made through the Vendor System 36 Taxation of Scholarship / Fellowship Grants Qualified vs. Nonqualified Amounts Payments to Degree Candidates Qualified Amounts – Used for tuition and fees and related course requirement expenses is excludable from the recipient’s gross income if the recipient is a candidate for a degree for the purpose of studying or conducting research at an educational institution. Nonqualified Amounts – For incidental expenses; e.g., room and board or expenses for individual papers/research projects, is not excludable from gross income. Therefore such expenses are taxable.

    37. Dec-11 DAY TWO Taxable Payments Made through the Vendor System 37 Taxation of Scholarship / Fellowship Grants Tax Reporting of Grants Degree Candidates Neither the qualified nor the nonqualified portions are reportable by the University. Any amount used for nonqualified expenses must be reported by the recipient on his/her tax return. Non-Degree Candidates and Post-Doctoral Fellows No amount is considered qualified; the entire amount of the grant is taxable and must be reported by the recipient on his/her tax return, though not reportable by the University.

    38. Dec-11 DAY TWO Taxable Payments Made through the Vendor System 38 Taxation of Scholarship / Fellowship Grants When Work Is a Condition of Grant Compensation for Services—Payroll treatment Any portion of a grant representing payment for the performance of teaching, research, or other services by the student, required as a condition of receiving such a grant, is considered wages for employment tax purposes.

    39. Dec-11 DAY TWO Taxable Payments Made through the Vendor System 39 Taxation of Scholarship / Fellowship Grants Rules for Nonresident Aliens Treatment differs from U.S. residents Qualified amounts are exempt same as U.S. residents Nonqualified amounts are reportable on 1042-S Nonqualified amounts subject to 14% withholding unless tax treaty provisions apply Non-degree candidates subject to 30% withholding unless tax treaty provisions apply Forms Required: W-8BEN (3 versions—all hyperlinked) W-8BEN (UCSB-GS) – UCSB Graduate Student, F1, J1 visas W-8BEN (UCSB-EV) – UCSB Exchange Visitor, F1, J1, M1, Q1 visas UC W-8BEN – non-UCSB NRA’s on B1, B2, WB, WT and other visas

    40. Dec-11 DAY TWO Taxable Payments Made through the Vendor System 40 Taxation of Scholarship / Fellowship Grants Employee Educational Assistance Payments Excludable from income under certain IRS-compliant programs IRC Section 117 – includes UC’s qualified Fee and Tuition Reduction programs IRC Section 127 – use form to determine taxability and job relatedness of activity Use form to calculate benefit See page 43 (last page, Exhibit D) of this policy link: http://www.ucop.edu/ucophome/policies/acctman/t-182-77.pdf

    41. Dec-11 DAY TWO Taxable Payments Made through the Vendor System 41 Vendor Payments with Income Tax Implications Questions

    42. Dec-11 DAY TWO Taxable Payments Made through the Vendor System 42 Nonresident Alien Tax Issues Who Is Nonresident Alien Status certification process If on IRS Form W-9 CANNOT affirm I am a U.S. person (including a U.S. resident alien) “Person” includes entities such as corporations Then IRS Form W-8BEN is required Form UC W-8BEN replaces the University’s old Statement of Citizenship form http://www.ucop.edu/ucophome/cao/paycoord/w8ben.pdf See AMC* T-182-27, Taxes: Federal Taxation of Aliens http://www.ucop.edu/ucophome/policies/acctman/t-182-27.pdf *Accounting Manual Chapter

    43. Dec-11 DAY TWO Taxable Payments Made through the Vendor System 43 Nonresident Alien Tax Issues Components of Nonresident Alien (NRA) Taxation Determining residency for tax purposes Visas: what activities they allow / prohibit Possible international tax treaty benefits NRA Tax withholding and reporting rules The ITIN—Individual Taxpayer Identification Number Procedures and tools for paying NRA’s See AMC* T-182-27, Taxes: Federal Taxation of Aliens http://www.ucop.edu/ucophome/policies/acctman/t-182-27.pdf *Accounting Manual Chapter

    44. Dec-11 DAY TWO Taxable Payments Made through the Vendor System 44 Nonresident Alien Tax Issues Alien classifications / administration Certain alien classifications (visa types) may receive Employment compensation Independent Contractor Payments (Honoraria) Scholarships/Fellowship grants Reimbursement for travel/sustenance expenses (some may receive Honoraria) Visa Classifications Relate to Employment Provisions As a condition of admission Only with special authorizations / permits Prohibited Under regulations issued by U.S Immigration and Customs Enforcement (ICE – formerly INS) – immigration law and enforcement Internal Revenue Service (IRS) – tax policy only

    45. Dec-11 DAY TWO Taxable Payments Made through the Vendor System 45 Nonresident Alien Tax Issues Immigration (ICE) Status Categories U.S. Citizen — By birth or Naturalization Permanent Resident — Immigrant with “Green Card” Nonresident — Aliens temporarily present in the U.S for specific purposes as indicated by visa type Refugee, asylee, etc. U.S. Tax (IRS) Status Categories U.S. Citizens and Resident Aliens are taxed under same regulations Nonresident Aliens are subject to 30% withholding unless tax treaty provision or tax code regulation applies

    46. Dec-11 DAY TWO Taxable Payments Made through the Vendor System 46 Nonresident Alien Tax Issues Determining Federal Tax Status (IRS) Factors Determining Alien Tax Status “Green Card” test — permanent immigrant visa, resident alien Substantial presence test — generally relevant for visas permitting employment Visa categories exempt from substantial presence test — generally F-1, J-1 student/teacher visas Brief visitors for business/tourism—B-1, B-2, WB, WT All must use UC’s new form to determine Alien Tax Status (formerly Statement of Citizenship): University of California Certificate of Foreign Status for Federal Tax Withholding (UC W-8BEN) http://www.ucop.edu/ucophome/cao/paycoord/w8ben.pdf

    47. Dec-11 DAY TWO Taxable Payments Made through the Vendor System 47

    48. Dec-11 DAY TWO Taxable Payments Made through the Vendor System 48 Nonresident Alien Tax Issues Immigration Expenses Allowable as University Expense, not taxable to the alien employee, employment related Visa application, renewal fees Costs of obtaining status as a permanent resident Related legal fees and travel must be properly substantiated Immigration–related fees associated with scholarship / fellowship grants Considered part of fellowship grant Must be included by student in gross income

    49. Dec-11 DAY TWO Taxable Payments Made through the Vendor System 49 Nonresident Alien Tax Issues The ITIN The Individual Taxpayer Identification Number (ITIN) For aliens not eligible for Social Security Number (SSN) For tax reporting purposes only - implies no legal immigration status Without SSN or ITIN Alien is not eligible to receive certain payments May not receive benefit of applicable tax treaty (Up to 37% withholding) May not file tax return to claim refund of withheld income taxes

    50. Dec-11 DAY TWO Taxable Payments Made through the Vendor System 50 Nonresident Alien Tax Issues Miscellaneous Visa Issues VISA Provisions An alien’s activities may not violate provisions of his/her Visa See alien policy link for discussion of various visa classifications (p.14, or summarized in Appendix C, p.69) http://www.ucop.edu/ucophome/policies/acctman/t-182-27.pdf B-1, B-2 visas and WB, WT visa waiver For short term visitors for business, pleasure, tourism With limitations may be paid honoraria, related expenses See our fill-in form Nonresident Alien (NRA) Guide, Questionnaire & Forms, http://www.accounting.ucsb.edu/pdf/ap_NRA.pdf

    51. Dec-11 DAY TWO Taxable Payments Made through the Vendor System 51 Nonresident Alien Tax Issues Responsibilities Host department must obtain form UC W-8BEN and work with visitor to complete documents Ideally, all tax issues and any withholding amounts should be disclosed in contracts, engagement letters Alien must correctly complete all required documentation or be subject to NRA income tax withholding (up to 37%, or “gross-up”) — see “Gross-Up” table in training materials Accounting must ensure alien payments are properly reported and applicable taxes withheld

    52. Dec-11 DAY TWO Taxable Payments Made through the Vendor System 52 Nonresident Alien Tax Issues Scenarios & Questions

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