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Non-employee/Foreign Visitor Payments

Payments to NRA visitors other than employees and scholarship/fellowship/traineeship recipients.

Withholding Rates

 

30% flat rate on U.S.-sourced payments unless a tax treaty applies.

Applies to:

  • Independent contractor payments (for services rendered in the US)
  • Guest speaker honoraria
  • Human research participant payments
  • Royalty payments
  • Non-employee prizes or awards (tax treaty does not apply)

Exceptions include:

  • Student/faculty recruitment
  • Miscellaneous reimbursements for departmental or project supplies
  • University student or faculty travel
  • University visitor travel reimbursements made under accountable plan rules

If a tax treaty applies:

  • Withholding may be reduced or eliminated
  • GLACIER required. Form 8233 (for personal services) or W-8BEN (for passive income) must be submitted
  • Without proper review and documentation, full statutory rates apply

Royalty

Royalty payments for or in association with a foreign individual or entity will constitute a source of income in the U.S. Certain types of royalties are given reduced rates or exemptions under some tax treaties. The royalty article applies to both individuals and entities. (Internal Revenue Code Sec. 1441)

  • Industrial Royalties: Royalties for the use of, or the right to use, patents, trademarks, secret processes and formulas, goodwill, “know-how”, franchises and similar rights. It also may include rents for the use or lease of personal property.
  • Copyright Royalties: Royalties paid for the use of copyrights on books, periodicals, articles, etc.

Expense Reimbursements

Payments made to, or on behalf of a Nonresident Alien (NRA) for the purpose of reimbursing travel and lodging expenses are not reportable to the IRS on the condition that Accountable Plan rules are met. The benefits of this IRS position are:

  • The NRA is not required to provide a taxpayer identification number.
  • The NRA is not required to file Form 8233 to eliminate withholding tax if the NRA is from a treaty country.
  • There is no withholding required on travel expense reimbursements even if the NRA is not from a treaty country.
  • The university is not required to report travel expense reimbursements for NRAs to the IRS.
Accountable Plan Requirements

The accountable plan rules are outlined in Treasury Regulation §1.62-2:

  • Establish the business purpose and connection of the expenses
  • Substantiate the expenses claimed to the payer within a reasonable time period
  • Return any amounts to the payer, which are over the amount of the substantiated expenses within a reasonable period of time

Amounts which are over the amount of the substantiated expenses, or which are not accounted for within a reasonable time period, are reportable to the IRS on Form 1042-S and are subject to 30% statutory withholding.

(Internal Revenue Code Sec. 1441, Treasury Regulation §1.62-2)

Honoraria

Foreign national visitor B-1/B-2 or ESTA travelers may be paid an honorarium or reimbursement for travel expenses for usual academic activity (or activities), such as guest lectures or presentations.

The Electronic System for Travel Authorization (ESTA) allows eligible foreign nationals from Visa Waiver Program (VWP) participating countries to visit the U.S. without a visa for up to 90 days for business or tourism.

Visitor Visa Types:

  • B-1: Business visitor
  • B-2: Tourist visitor
  • WB: Business visitor under VWP
  • WT: Tourist visitor under VWP

WB and WT visa are issued to an individual from a designated country participating in the Visa Waiver Program (VWP).

When completing GLACIER: Select “WT Waiver for Tourism” or “WB Waiver for Business” as appropriate.