Memo on guidelines for payments to foreign visitors

TO: Deans, Directors and Department Heads

FROM:Andrew P. Mangels, Controller and
Juan A. Jarrett, Assistant Vice Chancellor for Human Resources

DATE: September 8, 2004

SUBJECT: Honoraria and Reimbursements for Foreign Visitors

Attached is the Honoraria and Reimbursements for Foreign Visitors Guidelines compiled by the Controller’s Office to provide departments with guidance on how to process transactions with foreigners.

As with any document dealing with tax issues, it cannot be all-inclusive and many exceptions apply. Departments are urged to consult with the International Programs Office, Human Resources and the Controller’s Office well in advance of any visit to minimize taxes and expedite payments. The issuance of this guide was prompted in part by recent changes in IRS regulations resulting in changes in the methods by which the campus can make payments to foreigners.

IRS Tightens Rules for Paying Certain Foreigners - The Internal Revenue Service recently made it more difficult for certain foreign visitors, generally J-1s, to get paid and to avail themselves of tax treaty benefits in connection with compensatory payments. The Controller’s Office urges J-1 foreign visitors who do not already have a US Social Security Number or Individual Taxpayer Identification Number to apply for a US Social Security Number as soon as possible to avoid an automatic 30% withholding for lack of an identification number.

Issuance of Individual Taxpayer Identification Numbers (ITIN) by the Controller’s Office- The IRS has also implemented changes affecting the issuance of Individual Taxpayer Identification Numbers (ITIN). The Controller’s Office can create ITINs only for individuals in B-1 or Visa Waiver status with proper documentation. The Controller’s Office will no longer be able to create ITIN numbers for dependents of Foreign Visitors. Individuals who are in dependent visa categories must submit their application for an ITIN (W-7 form) along with their tax return in order to apply for an ITIN number.

Requirements for Expense Reimbursements – The Controller’s Office has revised its procedures for reimbursing expenses to foreign visitors. Foreign persons who do not have a SSN or ITIN # will no longer be required to obtain one to be reimbursed for expenses with valid receipts. Foreigners who already have SSNs or ITINs need to provide them for vendor history purposes at the time of reimbursement. In addition, the Foreign Visitors Information Form is no longer required to be completed and employee candidate reimbursements require only the W8-Ben Form.

The Controller’s Office will be scheduling information sessions for departments that will include representatives from Human Resources, International Programs Office and the University Tax Office to answer questions and issues associated with payments to foreign persons. Questions concerning this document may be directed to the Controller’s Office at 545-0806.