Payments to
Nonresident Aliens
Presenter:
Lisa McLaughlin, Office Supervisor
lmclaugh@email.arizona.edu 621-3864
Introductions
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Name
Department
Years with UA
Reason for attending-what you would like to get out of
this class
Overview
• Policy 9.16
• Foreign Individual
Payments
• Required
Documentation
• Taxation
Policy 9.16
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Identifies payment allowed to foreign visitors
Provides details about how to request payment
Identifies Federal income tax consequences
Complies with U.S. Citizenship and Immigration Services
(USCIS) regulations
NOTE: The University will not make any payment to a foreign visitor unless
specifically allowed by policy 9.16
Who qualifies as a “Foreign Visitor”?
• A “foreign visitor” is:
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Anyone other than a US
citizen or Permanent
Resident (Green Card
holder)
• “Foreign Visitors” can
also be called:
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Nonresident Aliens (NRA)
Foreign Nationals
International visitors
What is not covered by policy 9.16?
• Policy 9.16 does not cover:
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Employee payments (Human Resources Recruitment Policy)
Student payments through the financial aid office (Financial
Policies and Procedures Manual 9.13)
Processing a Disbursement Voucher or Requisitions (see UITS
training or tutorials)
Foreign Individual Payments
Best Method of Payment
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Disbursement Voucher
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After the fact for services
provided
To reimburse allowable
expenses
Stipends (non-service
scholarship/fellowship)
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Purchase Order/Requisition
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Prepay for merchandise
Prepay expenses (directly to a
third party vendor)
Payments over $5000 or
multiple payments
Paying a 3rd Party (via a PO)
• Payment to a third party vendor on a foreign visitor’s
behalf is considered a payment to the foreign visitor
directly
• Note on the requisition:
 This Purchase Order is for a payment on behalf of [visitor] who is a
nonresident alien from [country]
 Visitor’s visa type
 Length of time staying at the UA
 Purpose of the visit
Determining if payment can be made
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Things to know first:
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Visa type
Visa sponsor (UA, Another institution, No sponsor)
Purpose/Activities (Speaker, student, attending conference, etc.)
Payment type (expense reimbursement, service fee, royalty, etc.)
Allowable under Policy 9.16?
Activities authorized based on immigration status?
Able to obtain documentation to substantiate immigration status
Note: Individuals cannot pay or pay on behalf of foreign visitors with
personal funds and expect reimbursement.
Most common Visa types
• Most common Visa types paid by UA
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B1, B2, WB, WT
F1, J1 (students)
J1 (short term scholars, research scholars)
H1, O1, TN (expense reimbursements only)
• Employment Authorization (F-1 OPT, J2)
• Permanent Residents (Green Card holders)-treated as
UA citizens
B1, B2, WB, WT (Business and Tourist Visas)
• Visa Waiver Program-travel to US for tourism or business
for stays of 90 days or less (WB/WT). No separate visa
document. Often referred to as ESTA.
• B1/B2 require an actual visa document
• Can be paid an honorarium for academic activities
(lecturing, teaching, sharing knowledge, meetings, etc.)
• Subject to restrictions (9-5-6 Rule)
• $600 or less
9-5-6 Rule
B1/B2/WB/WT visa holders can receive honoraria payments and associated expenses
on the condition that:
Academic activities do not exceed 9 days and payee has
not received honoraria payments from more than 5
institutions in the past 6 months.
Payee must submit a signed Honorarium Statement (found on eforms) to confirm
that this is true.
9-5-6 Rule
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Does not apply to B1/WB status if reimbursing only for expenses
associated with the usual academic activities
Applies to B2/WT status even if reimbursing only for expenses
Only the days the individual is engaged in academic activities
during the visit are counted against the 9 days
The 9 days is the time limit for academic activities for each visit
The 5 times are counted per visit, even with the same institution
Expenses for the days that are not counted against the 9 days are
reimbursable if they are reasonably related to the academic
activities
9-5-6 Rule Example
A B1 visitor is on campus to work on a research project
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The visitor arrives on Day 1 and departs on day 14
Day 1 is Sunday
He works from Days 2-9 and Days 9-12
He rests on Days 7 & 8 (weekend) and 13
Does he meet the 9-5-6 rule?
F1 and J1 Students
• Sponsored by the educational institution they are
attending
• Generally may only be compensated for services by their
sponsor
• Allowed to receive non-service scholarship/fellowship
payments for institutions other than their sponsor
J1 Sponsored by Another Institution
• Must obtain a Responsible Officer (RO) letter from their
sponsoring institution
• Letter must be signed by their RO (the person who
signed form DS-2019)
• With RO authorization, J1 can be reimbursed for
business expenses and paid a fee for services
F1 & J1 Student Travel Expenses
Responsible Officer (RO) Letter
Responsible Officer (RO) Letter
An RO letter must include the following:
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Letterhead from institution
Name of individual
Confirmation of visa status
Authorization for academic activities
What can be reimbursed (fee for services, expenses, both)
Signature of Responsible Officer
Responsible Officer who signs the letter must be the same as the
RO listed on the DS-2019
H1, O1, TN: Employment-based visas
• Only employer (sponsor) can pay these individuals for
services
• Reimbursement for business expenses for academic
activities is allowable
• Payment for services by someone other than their
employer could jeopardize visa status
Employment Authorization
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F1 under OPT (Optional Practical Training)
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If under OPT, still considered to be in F1 student status even if
graduated
May only work in the field of study related to the degree completed
Job must be appropriate to level of education
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J2 (Spouse of J1)
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Individuals who’ve applied for permanent residency under
Adjustment of Status (AOS)
Honorarium and Associated Expenses
Visa types allowed to be paid an honorarium and
associated expenses:
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B1/B2 and WB/WT
Border Crossing Card holders (Mexico)
J-1 sponsored by another institution (RO letter required)
EAD or EAC holders (self-employed)
Prospective Employee Interview Expenses
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Paying/Reimbursing for
Interview Expenses
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Immigration authorization
is not required
Foreign documents are not
required
Proof of interviewing must
be provided
Please include the following
statement on your edoc:
“(Payee’s Name) is being
reimbursed for expenses associated
with interviewing only and did not
perform any services for the
University”
• If paying other than
interview expenses,
documentation must be
collected
 Payment may be reported
as income
 Tax may be withheld as
required
Permanent Residents
• Treated as US citizens for documentation and taxation
purposes
• Not appropriate to request a copy of their “green card”
• W-9 is only documentation required (can be found on
eforms)
• Must have an SSN
Other Types of Payments
• Royalty: payment for the right to use some type of
intangible (intellectual) property
• Software License Fee: fee for a license to use software
without ownership rights
• Subcontract Service Payment
• Foreign Artist Payments: payment for a specialized
performer/talent
Required Documentation
Immigration Documents
• Required
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Passport (photo page)
Entry stamp (in passport)
Visa (unless WB/WT)
I-94 (front and back or
electronic printout)
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Other Required Documents
(as applicable)
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I-20 ( for F1)
DS2019 (for J1)
I-797 (H1, O1, TN)
Honorarium Statement (as
needed)
Responsible Officer letter (as
needed)
Substantial Presence Test (as
needed)
GLACIER record (as needed)
GLACIER Record
• GLACIER is the online tax compliance software the UA
uses to determine tax residency and treaty
determination for foreign visitors
• GLACIER is required for any type of tax reportable
payment such as fees for service, royalties and
scholarship/fellowship payments
• GLACIER is not required if reimbursing expenses only or
paying a third party vendor
Completing a GLACIER Record
• Department contacts FSO Accounts Payable
• FSO Accounts Payable will email GLACIER login
information to the foreign visitor, if it’s required
• Once completed, foreign visitor prints and signs
GLACIER reports and tax forms
• Signed GLACIER forms (originals) and required
documentation are submitted with a Disbursement
Voucher cover sheet to FSO Accounts Payable for
payment.
Passport
A passport is
necessary to verify
citizenship, and is
issued by the visitor’s
country of citizenship.
Check issued and
expiration dates
VISA
A visa is issued by the
United States
government and
allows a foreign visitor
to travel to a US port
of entry
I-94 Arrival/Departure Record
If allowed to enter the
US, the visitor receives
a stamp in their
passport or an I-94
This officially
determines how long a
visitor can remain in
the US
I-94 Arrival/Departure Record
Many visitors receive
an electronic I-94 only.
This document can be
retrieved from the
following website:
https://i94.cbp.dhs.gov
Special Rules for visitors from Canada or Mexico
CANADA
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Does not need a visa to enter the US
May not be issued an I-94 or obtain an entry stamp
Deemed B1 status without the I-94
Must provide a valid passport, Canadian Permanent Resident Card
or Canadian Birth Certificate
MEXICO
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May have a Border Crossing Card (BCC) equivalent to a B1/B2 visa
An I-94 may not be issued to BCC holders
If staying in the US for less than 30 days deemed B1 status without the I-94
Border Crossing Card
Mexican citizens may
have a Border
Crossing Card to enter
the US
A BCC is equivalent to
a B1/B2 visa
Passport with Entry Stamp
The entry stamp is
very important, as it
determines the
individual’s status.
For a visa waiver
(WB/WT) this is the
only stamp the
individual will receive
DS-2019 for J1
Expiration date on I94 or stamp reads as
D/S (Duration of
Status)
Status expires on the
end date of the DS2019
I-20 for F1
The expiration date on
I-94 for an F1 student
reads as “D/S”-it is the
end date on the I-20.
Employment Authorization Card (EAC)
Employment Authorization Document (EAD)
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With a valid EAC or EAD the following are not needed (if
reimbursing for expenses only):
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If an EAC or EAD holder is receiving a fee for services:
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Copy of passport
Visa or I-94
SSN
SSN is required
GLACIER record & documentation required
Ensure that the EAC/EAD is reviewed for any restrictions
Also referred to as a Work Permit
EAC/EAD Card
US Taxpayer Identification Number (TIN)
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If the foreign visitor will be paid a fee for services, they must
have a US issued taxpayer ID number prior to payment:
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Social Security Number (SSN)
Individual Taxpayer Identification Number (ITIN)
EXCEPTION:
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If a foreign visitor receives compensation for services performed,
will be working 30 or fewer days, and has no US TIN, payment
can still be made. However, the individual will not be eligible for
treaty benefits and the University must withhold federal income
tax at a rate of 30%
A foreign visitor may qualify for treaty benefits in this situation,
if they provide a foreign tax ID number (new rule)
US Taxpayer Identification Number
• Most reimbursements for expenses only do not
require an SSN or ITIN
• Payments of any kind made to scholarship/fellowship
recipients without an SSN or ITIN will be subject to
tax withholding
• For additional information, please see: Payments
allowed and Disallowed Under Various Visa
Classifications-Policy 9.16
Taxation
Taxes
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Scholarships/Fellowships (including school related
reimbursements)
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14% for F, J, M or Q status
30% for any other status
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30% tax withholding
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No tax withholding
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No tax withholding
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No tax withholding
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Tax withholding issues unique to the employee
Fees for Service
Expense Reimbursements (except those that qualify as
scholarships)
Scholarships from a foreign source
Services outside the US
Employee paychecks
Services Performed Outside the US
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Not subject to US Immigration regulations
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Substantial Presence Test Form must be submitted to A/P
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Nonresident Alien-payment is not reportable/taxable
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Resident Alien-payment is reportable/taxable
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Include this statement in the DV or PO notes section:
[Payee’s Name] is a Nonresident Alien who performed all services outside
the US Taxing Jurisdiction
Substantial Presence Test (e-forms)
Foreign-sourced scholarship
• Foreign-sourced scholarship payment is not subject to US
tax reporting or withholding
• A scholarship is foreign-sourced if:
 Academic activities take place outside the US
 Payer of the scholarship is located outside the US
• Documentation must be provided to verify that the
scholarship is foreign-sourced
IRS Form Changes for Non-Resident Aliens and
Foreign Entities (effective 7/21/14)
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Form W-8BEN
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Required for all nonresident
alien individuals receiving
compensation for services
or royalties (regardless of
whether or not a tax treaty
is available
If a treaty exemption is
available, a foreign tax
identification number may
now be used in lieu of a US
issued SSN or ITIN
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Form W-8BEN-E
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New form required for
foreign entities receiving
compensation for services
or royalties
Used to establish foreign
tax residency and
potentially claim an
exemption from
withholding due to an
income tax treaty
GLACIER record determines
whether a W-8BEN-E or a
W-8ECI form is needed
Form W-8ECI and W-8EXP
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Form W-8ECI
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Used for entities that wish to
be exempt from tax
withholding based on the
receipt of Effectively
Connected Income
Effectively Connected Income
is when a foreign entity has a
permanent base of
operations in the US and
receive income that is
effectively connected with
the conduct of a trade or
business in the US (i.e.
income from commercial
activities)
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Form W-8EXP
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Used by foreign governments and
foreign tax-exempt organization
to claim an exemption based on
their status as a government or
tax-exempt organization
Must include a letter of
determination from the IRS that it
has tax exempt status under
section 501(C)(3) of the Internal
Revenue Code, or an affidavit
from an attorney in the US stating
that such a foreign entity would
qualify under this section if it
applied for status
Restricted to certain types of
income, not automatic because of
government or tax exempt status
Tax Treaty Benefits
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Taxable payments may be exempt from tax withholding or
taxed at a reduced rate based on an income tax treaty
between the US and a foreign country
A US TIN (SSN or ITIN) or a Foreign Tax ID must be
provided in order to claim the treaty benefit
Certain criteria must be met in order to qualify for the
treaty benefit/not all types of income are eligible
Not all countries have treaty benefits available, even if the
payee has a US TIN
A list of countries that currently maintain tax treaties can
be found here:
http://www.irs.gov/Businesses/InternationalBusinesses/United-States-Income-Tax-Treaties---A-to-Z
Tax Treaty Benefits (cont.)
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Form W-8BEN is required for all independent compensation or royalty payments
for individuals
 UA retains the form as a record for audit; form is not submitted to the IRS
 Valid for 3 years if a payment is reported on a 1042 during each of these
years
Form W-8BEN-E is required for all service or royalty payments to entities
 Same rules as W-8BEN
Form 8233
 Required for individuals receiving compensation for services who wish to
claim a tax exemption due to a treaty benefit
 Original signatures are required
 Sent to the IRS for acceptance
 10 business day waiting period before exemption is granted and payment can
be made
 Valid for one year
Form W-8BEN
Form W-8BEN-E
Form 8233
Foreign Nationals-Tax Status
Reminders:
• The University of Arizona is unable to make any
payments (including expenses) to a Foreign Visitor
unless specifically allowed by the FSO Financial
Policies and Procedures Manual 9.16
• Preauthorization for exceptions must be approved by
the Financial Services Office Tax Compliance area
• Payments must be paid directly to the Foreign Visitor
or an appropriate third party vendor (i.e. hotel, travel
agency)
 UA employees may not be reimbursed
 Non-employee may not be reimbursed
Reference and Resources
• FSO Financial Policies and Procedures Manual 9.16
http://policy.fso.arizona.edu/fsm/900/916
• E-Forms
http://uabis.arizona.edu/eforms/
• FSO Operations/Accounts Payable
Accts_pay@fso.arizona.edu
520-621-9097
Campus PO BOX 210158
University Services Building (USB), Room 402
QUESTIONS?