Vanderbilt University has many international visitors who receive funding or payment through Vanderbilt. Students receive scholarship or fellowship grants. They may also work in a campus student job. Non-students may be an employee or a ‘contractor’ such as a guest speaker or academic consultant. Each payment to or on the behalf of an international who is a ‘nonresident alien’ is potentially taxable and/or reportable income. As such, we must determine the nature of the payment and the tax residency status of the individual.

All support of a student other than tuition, books, fees, supplies and equipment (small dollar) required of all students enrolled in the course is taxable income no matter how it is provided. Treaty benefits could apply.

Employees are taxed based on special W-4 rules. Treaty benefits could apply. Contractors (within the narrow limits allowed under immigration law) are subject to a flat 30% withholding on any earnings unless treaty benefits apply.

Reimbursement of travel expenses for employees or contractors will normally fall within the accountable plan rules with no withholding or reporting requirements. Specific moving expenses and job interview will also fall into this category.

Reimbursement of travel expense for non-employees (contractors are ‘employees’) is taxable because there is no service or ‘work’ relationship. Reimbursement of travel or living expenses for short term employees to come to VU to work are taxable as moving expense exclusions do not apply. (To qualify as employee travel expense, the individual would be required to travel from the VU home location to other locations to carry out the work assignment).

We must consider both immigration status and tax residency to determine if a payment is possible and what tax rules apply. The following sections discuss both. Later sections address processing each payment type.

Contacting the International Tax Office

Certain guidelines apply regardless of the payment type. Contact ITO to determine if a Glacier record is necessary and confirm there are no issues with certain payment types if a payment will be made.

A Glacier record is necessary if the payment will have any tax withholding or reporting requirements. Send an email to

nratax@vanderbilt.edu
First, middle and last name
Email address
Type of payment (expense reimbursement, honorarium, Wages, stipend, etc)
If wages, pay frequency
If person is already in U.S. in a Visa Category, we can advise if there will be a potential payment issue.

1. Key / Frequent Terms ^Back

U.S. citizen or permanent resident

It is very important to know if the person to be paid is or is not a U.S. citizen or permanent resident. A U.S Citizen is a person born in the U.S., or who meets specific criteria related to birth and parents. A U.S. Citizen also may be a person who is ‘naturalized’ by meeting certain criteria. A permanent resident is a person who has been granted permission to remain in the U.S. indefinitely, so long as they continue to meet the qualifications or elect to relinquish the status. These individuals are also known as ‘green card’ holders.

U.S. immigration law views individuals who are neither U.S. citizens nor permanent residents as ‘aliens’. U.S. tax law divides these ‘aliens’ into two categories.

Resident alien – a person who is not a U.S. citizen or permanent resident, but has met the substantial presence test.
Nonresident alien – a person who is not a U.S. citizen or permanent resident, and has not met the substantial presence test.
Substantial presence test -- a mathematical test that appears simple. It can become quite complex if the individual has been in the U.S. in different immigration categories over a period of years. Assuming the days present in the U.S. have not been ‘exempt’ (not to be included in performing the test), the person must be in the U.S. at least 31 days in the current year. (All days present in the current year are then counted). Add one third of the days present in the previous calendar year and one sixth of the days in the calendar year just prior. If all those add to at least 183 days, then the person meets the substantial presence test.

As long as the test is met each year, the person remains a resident for tax purposes. Any year the test is not met, the person reverts to nonresident alien status. This is the reason an individual who has been here in the past and returns must update Visa and days of presence information in Glacier.

The Glacier software used to collect immigration information calculates the substantial presence test. It is based on the immigration data entered by the individual. If the person passes the substantial presence test, he or she is treated as a U.S. person for tax purposes.

Note: If the person is not a U.S. Citizen or permanent resident, two sets of laws must be taken into consideration.

Immigration law determines what an individual in each specific visa category can do, whether or not any payment is to be made.

Be sure you know what the person is allowed to do before the individual provides any service.
Determine what kind of services can be compensated within the proposed visa. We may be unable to make the expected payment if payment is not allowed under immigration law.
Certain academic activities allow individuals to be treated as independent contractors relative to payments for limited services (example: honorarium to guest speaker), but no visa category allows an individual to operate a business in the
U. S. as an independent contractor. (There is a visa category for persons who meet specific criteria for visiting to establish a U.S. registered business, but this would almost never be relevant to usual activities on campus).

IRS law determines if the payment is potentially taxable and /or reportable, and whether it must be considered wages or can be considered as payment to a contractor. If the person is allowed to perform services and a payment will be made, IRS law does not currently look at the legality of the payment from the immigration standpoint. Legal or not, the payment is viewed as taxable income unless there is an IRS exclusion from taxability for that payment type.

Payments to individuals may be wages paid through payroll or payments made through disbursements. Wages may be paid by check or direct deposit. Disbursement payments could be in the form of a demand check, a wire, cash, or procurement card (P-Card) transaction. The payment could be made to the individual (often as reimbursements) or could be made directly to a vendor. The method of payment (how it is paid) is not the same as the kind of payment (why it is paid).

U.S. Citizens, permanent residents, and nonresident aliens can all receive the same kinds of payments as listed above. IRS law taxes both U.S. persons and non-U.S. persons on all the same items it considers as taxable income. The IRS has two completely different sets of laws for U.S. persons and non-U.S. persons. A U.S. person is a citizen, permanent resident or ‘resident alien’ (someone who has met the substantial presence test).

Withholding Agent Concept - The requirement for Vanderbilt to withhold. The IRS holds Vanderbilt University responsible for knowing if a payment is made to a person considered a nonresident alien and withholding the correct tax when the payment is made. If Vanderbilt does not withhold the tax, Vanderbilt must pay the tax for the person. If an IRS audit finds we failed to withhold, VU is responsible for tax, interest and any penalties. This liability may be passed along to the responsible department, depending on reason why tax was not withheld. Plan ahead to avoid any potential penalties or expenses.

Imputed Knowledge --The second critical concept. Imputed knowledge means that if a single person on the campus knows, the university knows. Therefore the university is responsible. In practice, if a department brings in a person who is not a U.S. citizen or permanent resident, and has any reason to believe the person might be an international visitor to the U. S, and provides funds of any kind, in any manner, and fails to inform the International Tax Office, Vanderbilt University is put at risk.

2. How To Determine If The Person Is A U.S. Citizen Or Permanent Resident ^Back

If the person will be set up in payroll and receive wages.

Complete Form I-9.

If the person will receive any other type payment-- (stipend, expense reimbursement, speaker fee, prize, award, participation in clinical studies, etc). Common forms used to request payments other than wages are stipend requests, check requests, external consultant forms and internal consultant forms, travel reports and P.O.s. The form may or may not have a place to indicate citizenship status.

Ask if the individual is a U.S. Citizen or Permanent Resident (Green Card holder). It can be considered discriminatory to guess based on name or country. (Non-U.S. persons are often in the U.S., and their names may be indistinguishable from U.S. persons). Indicate the status on the form in the place provided. If the form does not have a specific place, write in the information in the upper left hand corner.
Disbursements may request a U.S. person to complete Form W-9 related to non-wage payments.
Most payments to anyone who is not a U.S. citizen or permanent resident must be reviewed by the International tax office.

Alien information collection form is no longer in use -- It is not necessary to request a Form W-8BEN. If one is needed, we will request.
The Glacier interview is used to obtain all information required to administer the substantial presence test, calculate treaty benefits and document the forms needed.

3. Glacier Non-Resident Alien Tax Compliance System ^Back

Vanderbilt University uses secure online tax compliance software to capture the information required to determine the actual tax status of an international individual.

The individual must have a password to access the software. A record is set up as soon as International Tax is notified of a planned payment (See Contacting the International Tax Office). An email is sent to the individual from support@online-tax.net with a link and temporary login and password. ITO sends an additional email with instructions, and copies the department.

The individual, using immigration documents, completes a questionnaire. The questionnaire captures the current and past immigration status, days of presence in the US and any treaty-related information.

Once the individual enters his or her information, Glacier determines the tax status of the individual, and populates all required forms (much in the same way that a computerized income tax program prepares Form 1040 and any needed attachments based on what was entered). The person can print and sign the forms and submit to HR Finance, International Tax.

In addition to forms printed from Glacier, the International Tax Office needs copies of the immigration documents. The Tax Summary Sheet lists these documents as well as the forms completed by Glacier. An instruction sheet, printed out with the forms, provides information about where to send the forms.

4. Social Security Number ^back

Individuals receiving most types of payments will need either a SSN (Social Security Number) or an ITIN (Individual Tax Payer Identification Number)

Any individual, U.S. citizen or not, should have a Social Security Number if receiving wages. Wages must be reported on a W-2 and Federal law requires us to obtain Social Security Numbers and file Form W-2 with a correct SSN. A person can work without a Social Security Number, but Federal law requires applying for one, if working.

Note: A Social Security Number will never start with a 9, but an ITIN does. If the individual is from Canada, be sure the number is not a Canadian ID number, which has the same number digits as a SSN. A SSN is formatted XXX-XX-XXXX. A Canadian number is formatted XXX-XXX-XXX.

It is more difficult for an international person to obtain a Social Security Number. If you have someone who will be working, be sure the Social Security number is applied for as soon as is possible and no later than three to five days after the job offer or his or her date of arrival on a temporary work visa.

The following is necessary to apply.

Apply in person at a Social Security office and provide:

A completed SS-5, which is the Social Security Application
Proof of Identity (Such as a valid passport)
Proof of Immigration status (I-94 and an I-20 or DS-2019, etc.)
Proof of work eligibility
Proof of age

Original documents should be used or copies certified by the issuing agency. Photocopies and notarized documents are not acceptable. One document may satisfy multiple requirements, but at least two documents must be presented.

There are specific requirements related to students. See the electronic fact sheet from the Social Security Administration. It can be reached at http://www.ssa.gov/pubs/10181.html .

ISSS has usually been able to schedule a time for SSA representatives to be on campus in the early fall. This helped students easily apply for an SSN. At the time of this writing, SSA will not have representatives on campus for fall, 2007. See Stipend section for relaxed rule for students and Social Security Numbers.

The person making the application should request a receipt from the Social Security Office to use as proof of application and should provide a copy to Vanderbilt.

5. Working Without a Social Security Number ^back

A person can work without a Social Security Number (while obtaining one) if proof of eligibility to work is provided. If working, wages must be paid within the period established by the TN DOL. It is strongly recommended that the person does not begin work until the SSN is provided. However, individuals in certain visa categories must begin work within a specific period.

Note: Penalties for holding back wages waiting for a SSN would be much more severe than penalties for failing to provide a SSN on filings.

PeopleSoft requires a number in the identifier field to set up the pay record. A placeholder number must be issued if the SSN is not available, although that is undesirable for a number of reasons.

Ideally, the Payroll Action Form should be held until the SSN is received. Since the person must be paid within the parameters of TN labor law, that is often not possible. If the payroll deadline is near, contact the International Tax Office for assignment of a placeholder number.

Once the SSN is obtained:

Send a turnaround form to Records to correct the number in PeopleSoft.
Notify the International Tax Office at nratax@vanderbilt.edu the number has been received. (Do not email the number for security reasons).
Instruct the individual to update the number in Glacier and submit any treaty forms and the updated, signed summary sheet to International Tax

6. ITIN (Individual Tax Identification Number) ^back

Individuals that receive only payments that are not classified as wages cannot be issued a SSN. However, they may be required to have a number for various kinds of payments. Some common examples for Vanderbilt University are non-wage stipends and honoraria when a treaty exemption is claimed. An ITIN can be complicated to obtain. An ITIN is only for federal tax reporting, and has been misused for other purposes in the past. As a result, an ITIN will not be issued until a tax return is filed in most cases.

Students receiving non-service scholarship payments as stipends (but not working in any capacity) and guest speakers with honoraria should now be able to receive the ITIN without as much difficulty in the past, in theory.

ITIN regulations required that the SSN must be applied for and denied before applying for an ITIN. Newer rules allow the submission of certain types of letters with the application, rather than a denial from SSA. The student can submit a letter from the DSO with the W-7 form stating the student is not expected to be working during the stay as a student in F-1 or J-1 student status.

A guest speaker in B-1, B-2, WB or WT status can submit a letter of invitation to make the presentation, etc. or a statement from the department manager on the institution’s letterhead. The individual can use that form and the letter to submit to the IRS location indicated in the W-7 instructions. This appears to apply only to persons who can claim treaty benefits, based on examples provided by the IRS.

The form and instructions may be obtained from http://www.irs.gov/pub/irs-pdf/fw7.pdf .

A guest speaker that wishes to claim a treaty exemption to reduce the tax on the honorarium MUST have an ITIN (or SSN) at the time of payment.

Note: An ITIN always begins with ‘9’; the fourth digit is always a ‘7’ or ‘8’. It is formatted the same as a SSN. XXX-XX-XXXX.

Vanderbilt has a ‘Hold” number process to use when an individual must be paid and the applied-for number has not yet been assigned.

7. Process For Non U.S. Citizens Paid as an Employee Through Payroll ^back

If the I-9 shows the person to not be a U.S. Citizen or Permanent Resident, notify the International Tax Office by email.

Send an email to nratax@vanderbilt.edu with the following information.
First, middle (if available) and last name
An email address (Vanderbilt address not required)
Type of payment (Wages)
Pay frequency for wages
Tell the person to expect an email from support@online-tax.net that gives a password for Glacier, our secure online system used to collect the information we need to process payments correctly.

Find out if the person has a Social Security number or has already applied. (See section Social Security Number)

If no, tell the person to apply within the next 5 days and provide a copy of the receipt. (If already applied, ask for a copy of the receipt).
If the person still needs to apply, give the person a statement on VU letterhead showing he/she has been hired. (This can help the application process).

Process the PAF as usual, holding as long as possible for the SSN. (If you must pay before SSN is issued, contact International tax at nratax@vanderbilt.edu).

Wage and hour laws require the person to be paid timely. Do not withhold payment waiting for the Social Security Number.

8. Process For Non U.S. Citizens For Stipend (Nonservice) Or Any Nonservice ^back

Study, Research Or Travel Award Or Grant

There are two very different types of payments that may be called by the same name. These cause a great deal of confusion among our international population when they complete the Glacier interview. The word stipend simply means a fixed and regular payment or allowance.

Service stipend -- A form of payment for an internship or apprenticeship that is lower than what would be expected as a permanent salary for similar work. If the individual will teach, perform research, or otherwise be required to do some type work in order to receive the payment, it is treated as wages and will be paid through the payroll system.

Nonservice stipend -- This means the person is not required to do any kind of work (past, present, or future) as a condition of receiving the payment. It is given as a means of assisting an individual to pursue academic study or research. We see these in the form of the monthly stipend requests.

Time can be saved if International Tax is notified first. If the stipend or check request is sent without prior notification, payment may be delayed. Each individual must complete Glacier before any payment can be processed.

If the individual is not a U.S. Citizen or Permanent Resident:

Send an email to nratax@vanderbilt.edu with the following information.

First, middle (if available) and last name

An email address (Vanderbilt address not required)

Type of payment (stipend. Travel award)

Tell the person to expect an email from support@online-tax.net that gives a password for Glacier, our secure online system used to collect the information needed to process payments correctly.

Ask for the ITIN or SSN. (See SSN and ITIN sections)

Persons receiving wages and a stipend must have a Social Security Number (SSN). (If they do not have, and have not applied, inform them that they must apply and provide a copy of the receipt).

Persons who have not or will not be working must have an Individual Taxpayer Identification Number (ITIN). (If they do not have, inform them they must apply in one of the ways allowed in the W-7 instructions)

A student who will not be working can request a letter from ISSS stating the student will not work while in the U.S. (See ITIN section for commentary)

The letter must be attached to the Form W-7 when the application is submitted.

Note: Rules are supposed to be relaxed to the point that a SSN can be issued if the individual will be working in the future during their F or J status if a letter is issued indicating the time work is anticipated to begin. This is particularly useful if the person will receive a stipend one year and work the next. See the following link through ISSS for a letter form and for information for SSN and for ITIN. http://www.vanderbilt.edu/isss/students.html#social

Attach a copy of the support letter.

Send stipend or check request through normal processes. (Disbursements will route to International tax based how the form is checked for citizenship or permanent resident).

If the stipend or travel award is for study outside the U.S., it is considered foreign source income. We will need a confirming statement signed by the individual.

9. Process For Non U.S. Citizens For Speaker Fee Or Honorarium Or As A ^back

Consultant

An honorarium is a payment given to a professional person for services for which fees are not legally or traditionally required.

Speaker Fee is often used interchangeably with honorarium. The term simply means a speaker is being paid a specified amount for speaking or presenting a paper or demonstration.

A Consultant generally provides some expert advice or input into a project. In order to be considered as a consultant and paid as such, the person must not pass the test that requires treatment as an employee. (IRS publication 1779 provides guidance, or contact your Class and Comp contact). Generally, these persons would come to Vanderbilt University as a J-1 scholar for a brief period, although there could be limited instances where a B-1 might be acceptable (no hands-on work).

If a person will be requested to speak, present a paper, or otherwise actively conduct a segment of an educational event, the usual visa service limitations apply to what the person can legally do for Vanderbilt if the individual is not a U.S. citizen or permanent resident. This can be of particular concern if the person is already in the U.S. with a non-academic visa or with sponsorship through another university or even at Vanderbilt, in some cases.

If the person can not legally receive payment for the services based on visa limitations, payment may be denied.

Guest speakers may enter the U.S. on a B-1 (or the equivalent visa waiver), or sometimes a B-2 (not appropriate if the speaker is coming for the specific purpose of the academic event). Expenses are reimbursable under the accountable plan with the usual requirements. However, if the individual will be paid an honorarium, the following conditions must be met.

The visit must be for usual academic activity defined as including lecturing, teaching, sharing knowledge, attending meetings of boards and committees.
The visit must be no longer than 9 days at a single institution.
The individual may not accept honoraria from more than five institutions within a six-month period.

Time can be saved if International Tax is notified first. If the request is sent without prior notification, payment may be delayed. Each individual must complete Glacier before any payment can be processed.

If the individual is not a U.S. Citizen or Permanent Resident:

Send an email to nratax@vanderbilt.edu with the following information.

First, middle (if available) and last name
An email address (Vanderbilt address not required)
Type of payment (expense reimbursement, honorarium, etc)
Pay frequency (in this case, it is often ‘one time only’).
Tell the person to expect an email from support@online-tax.net that gives a password for Glacier, our secure online system used to collect the information we need to process payments correctly.

Ask for the ITIN or SSN.

Persons who have received U.S. wages in the past will have a Social Security Number (SSN) which will be used.
Persons who do not qualify for a Social Security number should have an Individual Taxpayer Identification Number (ITIN). However, the IRS will only issue an ITIN if a person has a tax filing requirement, and guest speakers who are not eligible to claim treaty benefits will usually not be issued one.

While the speaker is in the U.S., make a copy of the I-94 or I-94W and the visa stamp from the passport. It is really important to make copies of these while they are in the U.S., particularly the I-94 or I-94W as these must be surrendered when the individual leaves the country.

Persons from countries in the Visa Waiver Program or Canada (and a few others) may have slightly different documents than others.

They will not have a visa stamp.
They receive Form I-94W which is normally green, rather than the white I-94.
The passport should be machine readable.
Individuals from Canada may not have been issued an actual I-94W if entering the country in B-1 or B-2 status. (Persons from Canada are understood to be in B-1 or B-2 status, if they enter with no I-94). Entry in any other visa status such as J-1, F-1, H-1B will require that specific visa. (Persons obtaining a TN at the border should have TN on their I-94W). Canadians are subject to the same work rules as internationals from any other country.

Attach a copy of the letter of invitation (or copy of brochure showing individual on the agenda) and copies of the I-94 and Visa to the check request as well as any other items required by disbursements. The letter of invitation or the brochure showing the speaker on the agenda documents the ‘service’ requirement of the accountable plan. Send the check request through normal processes. (Disbursements will route to International tax based on how the form is checked for citizenship or permanent resident).

10. Process For Non U.S. Citizens For Reimbursement Of Travel Expenses ^back

If the individual is not a U.S. Citizen or Permanent Resident:

Common examples of travel expenses that are NOT taxable income:

Guest Speaker or consultant invited or hired by VU

Attach a copy of the letter of invitation (or copy of brochure showing individual on the agenda) to the check request or consultant form as well as any other items required by disbursements. The letter of invitation or the brochure showing the speaker on the agenda documents the ‘service’ requirement of the accountable plan. (Even if the speaker will only have travel expense reimbursed or directly paid to vendors, we need a copy of the speaker invitation to substantiate no tax withholding is required).

Moving expenses for employees meeting time and distance and ‘qualified’ travel expense definitions

Attach receipts and document it is for relocation expenses.
These will be signed off by ITO and returned to disbursements for processing.

Job-related interview expenses

Attach documents that demonstrate the purpose of the expense.

Note: Glacier is not required for travel expenses that are not taxable income.

If a person will be requested to speak, present a paper, or otherwise actively conduct a segment of an educational event, the usual visa service limitations apply to what the person can legally do for Vanderbilt if the individual is not a U.S. citizen or permanent resident. This can be of particular concern if the person is already in the U.S. with a non-academic visa or with sponsorship through another university or even at Vanderbilt, in some cases. Whether or not we can reimburse any expenses for a potential employee for a job will also depend on the visa category.

Note: It is also possible for speakers to be a representative of a business. They should inform you, if this is the case. Different handling will be required. Contact International Tax and see section Businesses.

Common examples of travel expenses that are taxable income:

Non-employee or contractor

Conference or Seminar attendees who are not speakers or presenters

Students traveling to seminars

Short term trainees

Prospective students

Employee

Living expenses of short term employees
Moving expenses that exceed the qualified or do not meet time requirements

Expense reimbursements do not qualify for exclusion from tax under the accountable plan if there is no quantifiable service provided to Vanderbilt by the individual. Another way of stating this is that there is no compensatory relationship or business relationship. The person would be neither an employee nor independent contractor. Whether or not any other wage or honorarium is provided is irrelevant.

The reimbursements (or direct payment to vendors) are potentially taxable income to the recipient. The terminology related to these payments

is often designated as financial aid or travel award. It may be in the form of full or partial reimbursement of expenses to attend educational events. It could also be for support while on campus for a few weeks or months for some educational purpose as a short-term student.

Reimbursed expenses to international attendees of educational events are considered a type of nonservice scholarship or fellowship and are taxable.
If the person is a non-resident alien for tax purposes, tax must be withheld at the time of payment, unless treaty benefits are available. Gross up is required if payment is to a third party by any method of payment, and tax can’t be withheld.

Travel or living expenses paid for short-term employees is taxable income. It will be paid through disbursements but sent to payroll to add to the employee’s wages for tax withholding and to be added to Form W-2.
Portions of relocation expenses for longer-term employees may not be covered under ‘qualified’ moving expenses. These will be paid through disbursements, but will be sent to HR processing. These are added to a paycheck for tax withholding and reporting on Form W-2.
Contact the International Tax Office if any reimbursement of expenses is planned. The usual Glacier record setup is required.

Send an email to nratax@vanderbilt.edu with the following information.

First, middle (if available) and last name
An email address (Vanderbilt address not required)
Type of payment (expense reimbursement for ……….)
Pay frequency (in this case, state ‘one time only’).
Tell the person to expect an email from support@online-tax.net that gives a password for Glacier, our secure online system used to collect the information we need to process payments correctly

11. Process For Non U.S. Citizens For Royalties ^Back

A royalty is a share paid to a writer or composer out of the proceeds that result from a sale or performance of the individual’s work. It is also a share in the proceeds paid to an inventor for the right to use the invention.

If the individual is not a U.S. Citizen or Permanent Resident:

Send an email to nratax@vanderbilt.edu with the following information.

First, middle (if available) and last name
An email address (Vanderbilt address not required)
Pay frequency (in this case, ‘single payment’)
Tell the person to expect an email from support@online-tax.net that gives a password for Glacier, our secure online system used to collect the information we need to process payments correctly.
Send the check request through the normal process. (Disbursements will route to International tax based how form is checked for citizenship or permanent resident).
Include information to define whether it is an industrial or copyright royalty.

12. Process For Non U.S. Citizens For Miscellaneous Payments ^back

(Prizes, awards, participation in clinical trials, any other payment that does not fit any of the above categories).

Each individual must complete Glacier before any payment can be processed, no matter how small the payment. (If there is a prize, award or other payment where the individual must receive the face value regardless of tax, then the payment will require a gross-up. Almost all of these payments will require 30% tax withholding if the person is a nonresident alien for tax purposes). Treaty benefits rarely apply, but possibly could in some instances.

If the individual is not a U.S. Citizen or Permanent Resident:

As soon as you are aware of the payment that needs to be made, send email to nratax@vanderbilt.edu

First, middle (if available) and last name with the following information.
An email address (Vanderbilt address not required)
Pay Type (copyright royalty or industrial royalty)
Tell person to expect an email from support@online-tax.net that gives a password for Glacier, our secure online system used to collect the information we need to process their payment correctly.

Complete check request as usual and attach details about the payment that shows what it is for and why. (Disbursements will route to International tax based how form is checked for citizenship or permanent resident).

13. Process for Non U.S. Citizens for Work Outside the U.S. ^back

Contact the Vanderbilt International Office if you will have a person working outside the U.S. The duties need to be examined to determine if the person fits ‘contractor’ rules or ‘employee’ rules and how the country of employment views the situation. If the person will be our ‘employee’, a new set of concerns apply. It could create a need to register to do business in the country, as their labor laws and tax laws now apply.

If the service performed by the individual will take place outside the U.S., there are no U.S. withholding and reporting requirements for a non-U.S. person. We do require a statement signed by the individual that the person is not a U.S. Citizen, permanent resident or tax resident and that all service is outside the U.S. If the person is a U.S. person, we will have reporting responsibilities and could have withholding responsibilities, depending on circumstances. Glacier does not apply.

14. Process For Non U.S. Citizen Professional Athletes and Entertainers ^back

This group of individuals can present quite complex situations. Substantial information may be necessary in some cases to determine if and how a payment can be made. Contact International Tax, and OIS or ISSS, as appropriate, early in the process in order to bring in visitors in a manner that legally allows them to perform the desired service and to receive payment.

These visitors may be arriving in the U.S. to perform or provide services in multiple venues. Professional athletes and entertainers have a group of visa categories of their own. These are ‘P’ visas, and may be petitioned by an employer, sponsor, an agent, including traditional booking agents or an attorney authorized to act as an agent. They may only work for the sponsoring employer or in the events or performances listed in the petition. There are also instances where there may be an ‘O’ visa. There are times when it is appropriate for them to enter on a B-1/B-2 or WB/WT, depending on the nature of the services.

Persons in some of the above visa categories might not be paid directly.
If an agent is paid on behalf of a single athlete or performer or group of performers, additional information will be needed to determine correct withholding.
There could be a Central Withholding Agreement that reduces the tax percentage.
There could be a corporation.

As soon as you are aware any payment is planned, send an email to nratax@vanderbilt.edu to determine the next step.

If you have contact information for an agent handling arrangements for the individual, we can contact that person for the information we need in order to pay and tax correctly.
If you are dealing directly with the entertainer, we need the usual information in order to set up in Glacier.

First, middle (if available) and last name with the following information.
An email address (Vanderbilt address not required)
Pay frequency and expected date of arrival.
Tell person to expect an email from support@online-tax.net that gives a password for Glacier, our secure online system used to collect the information we need to process their payment correctly.

Complete check request as usual and attach details about the payment that shows what it is for and why and check as Non-U.S. citizen or permanent resident.

15. Payments to Businesses ^back

Sometimes, we use foreign companies. There are tax rules related to these transactions just as there are to transactions with individuals. If the company is outside the U.S. and any service provided is outside the U.S., this is foreign source income for the company. If the company provides service for us inside the U. S., there is reporting and possibly tax withholding required.

Supplies and other tangible personal property purchased from a foreign source and shipped to us from abroad have no tax withholding or reporting requirements. Ownership passes to us.
Services performed outside the U.S. are not taxable in the U.S.
Foreign companies may perform services in the U.S. within certain criteria. We often purchase the right to use an article, photo or other resource in the U.S. The company retains all rights. Use in the U.S. is ‘sourced’ as income derived from the U.S. and is potentially taxable unless full treaty benefits apply and the proper form is provided.

If a company is located in a country with a tax treaty with the U.S., treaty benefits may be available.
The company must have a U.S. Federal ID number in order to claim the benefits.
The company must provide a properly completed Form W-8BEN to claim the benefits.
If the company is not registered in the U.S., tax withholding at 30% is required.
Form 1042S reporting is required with or without tax withholding.

If company has an established branch or location in the U.S. or has enough connection to be considered doing business in the U.S., it will file an income tax return in the U.S. This is considered income effectively connected with a U.S. trade or business.

The company will have a Federal ID number (FEIN).
The company must complete Form W-8ECI.
No withholding is required.
Form 1042S reporting is required.

If company is from a country with no tax treaty with U.S. and the income is not effectively connected with a trade or business in the U.S., tax withholding is required.

Tax withholding is 30%.
1042S reporting is required.

For current information, please see our International Tax website at

http://hr.vanderbilt.edu/hrdepts/VanderbiltUniversityHumanResources

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Introduction

Contacting the International Tax Office

If the person will be set up in payroll and receive wages.

Common examples of travel expenses that are taxable income:

13. Process for Non U.S. Citizens for Work Outside the U.S. ^back

15. Payments to Businesses ^back