Paying NRA’s and Foreign Businesses
“W8’s and Heartbreaks”
Panel of Presenters
Payroll – Anita Gurule
OPAA – Lisa Silbernagel
FA&A – Rae Lee Aguilar
Vendor Maintenance – Mary Page
Presentation - Outline
 Who is our expert panel?
 Who Qualifies as an Non-Resident Alien?
 What are typical payments made to NRAs?
 What FIS Policy has changed?
 413: Non-Resident Aliens (NRA)
 What new materials are available?
 Payroll, Fellowships, Foreign Entities, Honorarium and Travel.
 Q +A
 Please hold questions until the end of the presentation
Non-Resident Alien Resources at OSU
Name of Department
Responsibilities
Contact Person
Finance Accounting &
Analysis
Payment for Services &Travel
Siora Arce
Human Resources
Employment and
Affiliate/Courtesy Faculty
members
Business
Centers
International Student &
Faculty Services (ISFS)
Visas/Advise
Charlotte Ross
International Student
&Faculty Services (ISFS)
Visas/Advice
Jackie Bangs
Payroll Office
Wage, payroll
Anita Gurule
Post Award
Administration
Fellowships (Stipends)
Lisa
Silbernagel
Vendor Maintenance
Vendor Maintenance
Mary Page
Social Security Office
Issues SSN and Form SS-5
Main Office
Procurement
Personal Service Contracts
Tamara
Bronson
E-Mail Address/ Office
Siora.arce@oregonstate.edu
100 Kerr Administration Bldg
Phone Number
(541)737-0637
http://oregonstate.edu/fa/bc or visit
https://oscar.oregonstate.edu
charlotte.ross@oregonstate.edu
Snell Hall 444
jackie.bangs@oregonstate.edu
Snell Hall 444
anita.gurule@oregonstate.edu
B106 Kerr Administration Bldg
lisa.silbernagel@oregonstate.edu
B306 Kerr Administration Bldg
mary.page@oregonstate.edu
B306 Kerr Administration Bldg
http://www.ssa.gov/
1055 Bain St SE Albany, OR 97322
tamara.bronson@oregonstate.edu
Property Services Building PACS
(541) 737-2447
(541) 737-6475
(541)737-6468
(541) 737-0573
(541) 737-9585
(541) 737-0623
(1-800-772-1213)
(541) 737 8044
Who Qualifies as a Non Resident Alien?
 You are considered a non resident alien if you can NOT meet one of the
following two tests for the calendar year:
 Green Card Test
 Substantial Presence Test
 You must have been physically present in the United States on at least:
 31 days during the current year, and
 183 days during the 3 year period that includes the current year and the 2
years immediately before. To satisfy the 183 days requirement, count:
 All of the days you were present in the current year, and
 One-third of the days you were present in the first year before the current year, and
 One-sixth of the days you were present in the second year before the current year.
Examples of Payments made to NRAs
 Wages/Compensation
 Stipends
 Travel & Expense Reimbursements
 Scholarships/Fellowships (Note: Payments do not have to be paid
in cash; credits to a student's account qualify under these
requirements.)
 Independent Contractor Payments
 Royalties/Commissions
 Each payment requires the review of certain key factors:
 Visa Type, Residency Status, Substantial Presence Test.
FIS Policy Changes?
 413: Non-Resident Aliens (NRA)
 413-01: Payment for Services and Travel
 413-02: University Employment
 413-03: Scholarships and Fellowships
 413-04: Foreign Businesses
Financial Accounting & Analysis
Honorariums
•
A compensation payment of money for the person’s participation in a usual academic activity
or activities.
•
•
9/5/6 rule
•
•
Honorarium must be from no more than 5 institutions within a 6 month period for usual academic activities
lasting for not more than 9 days.
•
The 9 days is the time limit for each visit
•
Only the days when the NRA engages in the academic activities during the visit are counted against the 9
days
•
OSU can be institution #5- but not #6 for application of these rules.
Allowable Visa Types w/ restrictions
•
•
Includes lecturing, teaching, consulting, conducting research, attending meetings or seminars or otherwise
sharing knowledge.
B1/VWB and the B2/VWT- do not need visa sponsor, can be paid an honorarium and associated expenses for
usual academic activities, subject to restrictions. (the 9-5-6 rule)
Honorarium Taxability
•
•
Payments are subject to federal income tax withholding at 30% unless specifically exempted by an income tax
treaty.
Tax Treaties
•
United States has tax treaties with over 50 countries.
•
Each treaty is unique
•
To claim tax treaty exemption appropriate documentation must be provided.
FA&A Continued…
Travel Reimbursements
•
•
•
•
•
Travel expenses incurred with an OSU business purpose ;
such as airfare, rental car, ground transportation, meal per
diems, lodging, etc. may be reimbursed.
Travel expenses with proper documentation and receipts
are not subject to tax withholding.
Documentation must follow OSU Travel Policy FIS-411.
Refer to policy for guidance.
In some rare cases, NRA’s may not be eligible to receive a
travel reimbursement based on immigration regulations.
Therefore, prior to extending an offer to reimburse
expenses verify NRA is eligible. A1/A2 visa types not eligible
per INA Section 212(q)
The 9/5/6 rule applies to travel reimbursements also.
Flow Chart
Payroll
CO-NRA - Oregon University Systems Alien Information Request Form
 Central Payroll and the OUS Controller’s office use the CO-NRA
to determine an employee’s tax status.
 The CO-NRA is required for all Non-Resident Alien employees,
including those with H1-B, E3, and TN visas.
 Required on initial hire, renewed annually, and when a change in
status. (Example: Visa change, eclass change)
 Copies of the I-94 and I-20 or DS-2019 must accompany the CONRA.
Payroll Continued…
Non-Resident Alien W-4 Filing REQUIREMENT
 Box 3 - Single
 Box 5 – 0 or 1 Allowance
 Exceptions for Canada, Mexico, Korea, and students from India
 Non-Residents are not allowed to file EXEMPT (defaulted to single 0)
 Must have SSN. If no SSN received, leave blank and send
copy of receipt.
 Please refer to instructions at IRS site:
http://www.irs.gov/pub/irs-pdf/n1392.pdf
Payroll Continued…
Tax Treaties - Form 8233
 More than 46 available tax treaties available.
 Not guaranteed that an employee is eligible for a tax treaty.
 Country and status type (teaching / research vs. student / trainee)
specific.
 The 8233 must be accompanied by an Attachment Letter
(Attachment Letters are available in the Central Payroll Office.)
 More information concerning tax treaties is available in IRS
Publication 901.
Foreign Entities
 If you are paying a Stipend, Payment for Services or
Travel Reimbursement for a foreign individual then you
need to use the Policy 413 Payments to Non-Resident
Aliens.
 Payers are responsible for requesting a Form W-8 from any
business entities that are presumed, or otherwise believed to
be foreign.
 The foreign entity is responsible for determining which of
the four IRS W-8 forms is appropriate for their business
situation and the form should be signed by a person
authorized to sign W-8 forms.
Foreign Entities Continued…
PROCEDURE
 Is the payment for product or goods provided outside of the
US or for services performed outside of the US?
 If YES, no reporting or withholding is necessary. Collect the
signed W-8 form and send with copy of invoice to Vendor
Maintenance and if services are being paid then send PPSC to
FA&A and a copy to Vendor Maintenance.
 If NO, then withholding of taxes may be mandatory. Send
the signed W-8 plus any additional documentation such as
PPSC, Copy Visa, Copy of Passport to Vendor Maintenance.
W-8BEN
 Used primarily by entities and individuals to claim foreign
status or treaty benefits to establish that the
 Payee is not a US entity.
 Is there a US reporting TAX ID Number? If yes, then is part
II completed claiming Treaty benefits? If so, then payment is
tax exempt if income is covered by an article in the Treaty.
 All fields in line 10 must be completed to claim exemption
on royalty payments. If there is no Tax ID number, then
payment is subject to 30% withholding.
W-8ECI
 Used primarily by the payee or beneficial owner indicating that the
income that is listed on the form is effectively connected with the
conduct of a trade or business within the United States. (The foreign
parent company/organization has a location inside the US from which product is sent or services
performed and that location does not have a separate US Tax ID number.)
 If there is a US tax reporting number, the payment is subject to
30% tax withholding unless there is a services income listed on
line 9.
 In that case, payment is exempt from withholding. If there is not a
services income listed on line 9 then we are required to obtain from
the entity a different type of W-8 form.
 If there is no US tax reporting number, then payment is subject to
30% withholding.
W-8EXP
 Used primarily by the following entities to claim exemption
from tax withholding:
 Foreign governments, foreign tax exempt organizations,
foreign private foundations, government of a US possession,
or foreign central bank of issue.
 These entities must be claiming exemption under IRS Code
115(2) 501© 89s, 895 94 1443(b). Otherwise they need to file
a W-8BEN or W-ECI.
 Payment for form, W-8EXP, is usually exempt from
withholding
W-8IMY
 Used primarily by an intermediary, a withholding foreign
partnership, a withholding foreign trust or a flow through
entity.
 Copies of appropriate withholding certificates, documentary
evidence, and withholding statements must be attached to
the W-8IMY.
 Payment for form, W-8IMY, is usually exempt from
withholding.
Entities Flowchart
Paying STIPENDS for
Students or Visiting Researchers
•
•
•
Students or visiting researchers who are to receive a living
allowance only – not compensation for services – may be
paid a stipend
Stipend recipients are not considered employees nor
independent contractors – payment is through vendor
process and is considered subsistence allowance
Stipends cannot be paid from E&G funds except in very
rare circumstances in which prior approval has been
granted
PAYING STIPENDS FOR
Students or Visiting Researchers Cont…
•
Stipends will be subject to tax withholding unless tax treaty
is claimed
•
Treaty is claimed with IRS form W-8BEN – valid through
December 31 of 3rd succeeding calendar year
•
Treaty can only be claimed if NRA has a current SSN or
ITIN
PAYING STIPENDS FOR
Students or Visiting Researchers Cont…
Reference Materials
•
FIS policy 1402-17
•
IRS publications 901 & 515 (for withholding
agents/employers)
•
IRS publication 519 (for international visitors/taxpayers)
NRA Question and Answer