Payments to Foreign Nationals

Introduction 

This policy states the requirements for paying foreign national visitors and suppliers including consulting fees and honoraria paid to: Visiting professors, teachers, researchers, scientists, guest speakers, as well as other types of independent contractor arrangements.

Policy Statement 

Brown University will pay foreign nationals as independent contractors only after determining that the foreign nationals are eligible to be paid as independent contractors.

  • Payments will be subject to federal and state tax withholding as required by law.
  • Departments must collect documentation needed to determine whether foreign nationals are eligible to be paid as independent contractors under common law, tax law, and immigration law,.
    • Common law and tax law will be followed to determine whether a foreign national’s intended service for Brown can be the basis of an independent contractor arrangement and for the appropriate tax withholding from payment to the independent contractor.
    • Immigration law will be applied to determine whether a foreign national is eligible to work and be paid as an independent contractor.
  • Final decisions will be made by the Payroll Office. Departments are encouraged to seek guidance from the Payroll Office prior to engaging a foreign national as an independent contractor or guest speaker.
  • Brown University will not pay individuals who are not legally entitled to work in the United States. 
Definitions 
  • Foreign National – Any person other than a US citizen, also called a Nonresident Alien (NRA)
  • Resident Alien (RA) – An individual (also referred to as lawful permanent resident) who (a) is not a US citizen and (b) meets the green card test or substantial presence test. (Both tests are set out by the IRS.
    • See Foreign National Independent Contractor Payment Form to provide the Payroll Office the information required for both tests.)
  • Nonresident Alien (NRA) – An individual who is neither a US citizen nor a resident alien (defined above). A resident of a foreign country under the residence article of an income tax treaty is an NRA for purposes of withholding.
  • ITIN – Individual Taxpayer Identification Number
  • IRS – Internal Revenue Service
  • Independent contractor – An individual providing to Brown University services of limited scope and duration who has been determined to be an independent contractor, under IRS rules and common law, rather than an employee. For purposes of this policy, the term includes individuals receiving honoraria as well as individuals being paid for services of longer duration than the services that may be compensated by honoraria.
Responsibilities 

Financial Coordinator:  Initiate payment in Workday using the Create Supplier Invoice process.  Obtain all required documentation.

Cost Center Manager:  Review Supplier Invoice for compliance with University policies and ensure worktags are correct.

Foreign National Independent Contractor.  The Foreign National Independent Contractor must complete and sign required documentation, such as the Foreign National Data Collection Form.

Tax Specialist, Brown University Payroll Office.  The Tax Specialist in the Payroll Office will review the foreign national paperwork for all payments.

Procedures 

1. Review the chart Payment to Visa Types NOT Sponsored by Brown University to determine if the independent contractor you would like to engage may legally work and accept payment as an independent contractor. Departments are encouraged to contact the Payroll Office before making arrangements for a foreign national to perform independent contractor service for Brown University. The Payroll Office will review the information provided by the foreign national, through the department, to determine whether he or she may work in the United States. Brown University will not pay individuals who are not legally entitled to work in the United States.

 The Foreign National Data Collection Form must be completed and signed by the FN independent contractor. This form may not be completed by a Brown University employee.

 2. Ensure that the University’s requirements for hiring an independent contractor (resident or nonresident) have been followed. Please refer to the policy on independent contractors on the Controller’s Office website for detailed information.

 3. Review the chart Forms and Required Documents for Nonresident Alien Independent Contractors. Ensure all forms and documents requested are included with the request for payment. Insufficient documentation will result in the maximum federal and state tax withholding (30% federal and 5.99% state in 2012).

 4. Initiating Payment:

 Payments of $5000 or Less

  • Financial Coordinator Initiates payment using the Create Supplier Invoice business process in Workday.
  • Attach the supplier invoice and any applicable forms such as a Professional Services Agreement; Guest Speaker Agreement; or Student Fellowship, Prize and Award Payment Request.
  • Also, attach applicable foreign national forms.
  • Attach Form 8233 if the supplier informs you he/she is eligible for a tax treaty exemption.
  • Mail the original Form 8233 to the Payroll Office (Box 1873) after initiating payment; the Internal Revenue Service requires the original and signed form.
  • If the Tax Specialist in the Payroll Office does not receive the original form within five business days of receiving the supplier invoice in their workfeed, the supplier invoice will be sent back to the Financial Coordinator who initiated the transaction in Workday.

 Payments of $5,000 or More  (PURCHASE ORDER REQUIRED)

  • Initiate the Ad Hoc Request business process to create a requisition in Workday, and attach the Professional Services Agreement.
  • Initiate the Create Receipt business process in Workday when services have been completed.
  • Send the supplier’s invoice and all forms required to pay the foreign national supplier to Accounts Payable, Box J.
  • Accounts Payable will create the suppliers invoice related to the purchase order and scan in the invoice and the foreign national paperwork. *Accounts Payable will also send the original Form 8233 to the Tax Specialist in the Payroll Office.

All Payments:  The Tax Specialist in the Payroll Office will review the foreign national paperwork and determine whether the supplier is eligible for a tax treaty benefit:

  • If the supplier is eligible for a tax treaty benefit, no taxes will be withheld from the payment.  The foreign national supplier will receive a Form 1042s summarizing the payment (s) for tax reporting.
  • If the supplier is not eligible for a tax treaty benefit, the Tax Specialist in the Payroll Office will note in the comment section of the Workday business process that the transaction was reviewed for treaty benefits but no benefits are available.  Taxes will be calculated and withheld from the payment request.  The foreign national supplier will receive a Form 1042s summarizing the payment (s) for tax reporting.
Forms/Instructions
Appendices
Policy Owner
Approved by 
Assistant Vice President and University Controller
Contact(s) 

Doreen Burgers
Director of University Disbursements
Doreen_Burgers@brown.edu
401-863-7579 

Revision Date:  Fri, 2014-04-04 11:14