Payments To Foreign Individuals And Vendors
Payments to foreign individuals and businesses require additional documentation to ensure the University is in compliance with the tax regulations that apply to foreign payees. The documentation needed depends on the type of payment the University will be making to the payee, but every foreign payee must have a US social security number (SSN), individual taxpayer identification number (ITIN), or employer identification number (EIN).
International Student Employees
International student employees, at the least, must complete the Form W-4, Employee's Withholding Allowance Certificate according to Internal Revenue Service (IRS) specifications (more information). Additionally, depending on the student's country of residence and immigration history, the student may be eligible for tax treaty benefits that exempt a portion or all of their wage income (earned through campus employment) from withholding (see Tax Treaty Exemption below).
International Independent Contracts, Honoraria, One-Time Lecture Fees, Scholastic Awards, Prizes and Awards, and Travel Reimbursement
Payments of independent contracts, honoraria, one-time lecture fees, scholastic awards, prizes and awards, and travel reimbursements are restricted according to an international payee's immigration status (for more information see Payments That Can Be Made to Foreign Individuals). Additionally, each international payee must have a social security number or an individual tax-payer identification number (issued by the IRS). All payments made to international visitors must have federal withholding applied at a 30% rate (14% for unqualified scholarships) unless the recipient is eligible for tax treaty benefits (see Tax Treaty Exemption below).
The University is required to send information returns to the IRS at the end of each calendar year reporting certain types of payments made to any vendor. United States based vendors are required to provide the University a Form W-9, Request for Taxpayer Identification Number and Certification. Non-U.S. based vendors must provide the University one of the IRS Forms W-8 (W-8BEN, W-8ECI, W-8EXP, or W-8IMY). Obtain Forms
To claim a tax treaty exemption, IRS Form 8233, Exemption From Withholding on Compensation for Independent (and Certain Dependent) Personal Services of a Nonresident Alien Individual, along with the required statement must be completed for submission to the IRS. Form 8233 must be submitted to the IRS at least 10 days prior to any payment being made. The 10 day lead time is needed to assure that the IRS will not decline the tax treaty exemption. If a payment is made before expiration of the 10 days and the IRS denies the treaty exemption, the University is responsible for any under-withheld amounts.
For more information, please contact the University Tax Accountant at (970) 351-1828.