Policies and Procedures
PAYING FOR SERVICES OF AND EMPLOYING NON U.S. CITIZENS: USCIS (formerly INS) and IRS REGULATIONS AND REQUIREMENTS
USCIS (U.S. Citizenship and Immigration Services) Regulations
Faculty members are most commonly the first point of contact for foreign individuals who visit Wesleyan. While Finance does not expect Faculty or Administrative Staff to become tax experts, we request assistance with gathering important information from foreign individuals during the negotiation process and well in advance of the visit to campus. The information needed from non U.S. citizens may be provided by the individual on a FNIF.
A visitor’s USCIS visa status (i.e. B, VWB, VWT, J, H1B) is the most crucial piece of information needed, and is the first question that should be asked when an invitation is extended to a visitor. The visa type dictates the purpose of the visit and determines whether payments are allowed to be made to a foreign individual at all. In most cases, a sponsoring institution is the only employer authorized to pay the individual. Careful attention to the visa status will avoid a potential illegal payment or an embarrassing situation whereby Wesleyan cannot make a payment to an individual as promised. A payment that is accepted by a non U.S. citizen, but is not considered an acceptable payment by USCIS guidelines is illegal and may result in deportation of a foreign individual or a future denial of entry to the U.S. by the USCIS. The USCIS and IRS are working more closely, especially since 9/11, to implement stricter regulations and penalties on foreign individuals visiting the U.S. and receiving payments from U.S. sources. It is very important to remember that an illegal payment, if discovered by the USCIS, does have a greater adverse effect on the payee than the payer.
The following visa types most commonly allow payments by Wesleyan. If considering making a payment to an individual with a visa status other than one listed below, please contact Christine Rodrigue, x3502.
A foreign individual with a visa status of B-1 or B-2 is the most commonly paid by Wesleyan. A nonimmigrant may enter the U.S. in B-1 or B-2 status in order to engage in a “usual academic activity” for a period lasting not longer than nine days at any single institution, and may be paid an honoraria as well as associated incidental expenses. In order to enter the U.S. under this provision, the visa holder may not accept honoraria from more than five institutions or organizations within a six month period. This is commonly referred to as the “9-5-6 Rule”. If the B visa holder is receiving an honorarium to perform in an event or performance on campus, the event or performance must be open to students and/or the general public with no admission fee.
A visa waiver visitor must be classifiable as a visitor for business or pleasure under the rules governing B visas. Therefore, a visa waiver entrant may undertake any activity that is appropriate on a B visa and be treated for tax purposes the same as a B visa.
J-1 Professor or Researcher
A J-1 professor or researcher may be sponsored by Wesleyan or another institution. If Wesleyan is not the sponsor institution, professors or researchers may participate in occasional lectures and consultations outside the location of their exchange programs, as long as the activity is related to their program objectives and not specifically disallowed by their sponsors. In order to participate in these occasional activities for wages or honoraria, a J-1 visitor must obtain a letter from the inviting institution (Wesleyan), as well as obtain a recommendation letter from their own institution supervisor.
F-1 and J-1 Students
Foreign students who are sponsored by and attend Wesleyan enter the U.S. under an F-1 or J-1 visa. These students are only allowed to work for and be paid compensation for services by Wesleyan with specific restrictions.
Reimbursement Payments to Wesleyan sponsored students are allowable, but greatly discouraged. See memo regarding taxability of payments to Wesleyan international students.
A payment to a non-Wesleyan sponsored F-1 or J-1 student for services is considered illegal with possible deportation consequences to the student. A non-Wesleyan sponsored foreign student who participates in CPT or OPT training and possesses an EAD card, may work at Wesleyan.
It is allowable to reimburse a non-Wesleyan sponsored F-1 or J-1 foreign student for expenses incurred only with written approval by the student's host institution. The expense payment requires all receipts and is federally taxable to the student as an unqualified scholarship at a rate of 14%.
An H-1B employee is only authorized to work for their petitioning employer. An H-1B visitor petitioned by Wesleyan can only be employed by and receive payment from Wesleyan. An H-1B visitor may not be paid by Wesleyan if they are sponsored by any other institution.
Canadian and Mexican citizens can be paid by Wesleyan. Specific rules apply regarding employment.
IRS (Internal Revenue Services) Regulations and Requirements
The IRS requires that Wesleyan comply with specific federal tax withholding and reporting regulations when making payments to Non Resident Aliens. For tax purposes, all non U.S. citizens are considered to be Permanent Residents, Resident Aliens, or Non Resident Aliens. Permanent Residents (persons who possess a resident alien/green card) and Resident Aliens for tax purposes are taxed in the same manner as U.S. citizens. Non Resident Aliens are taxed under a separate set of IRS rules.
Residence status rules for tax purposes are governed by the IRS. Determining residence from non residence can become complex and confusing. Therefore, prior to a payment via Payroll or Accounts Payable, all payments to persons who Wesleyan knows or has reason to believe are non U.S. citizens are required to be authorized by the International Tax Administrator. The University's main goal is to comply with USCIS and IRS regulations and to minimize Wesleyan’s tax liability. Another important goal is to make foreign guests feel welcome, while assisting them in minimizing their tax liability and any adverse immigration situations.
When it is determined that a non U.S. citizen is a non resident alien for tax purposes, it is required that 30% federal tax be withheld from an Accounts Payable payment. Special withholding and reporting rules also apply for Payroll payments. If a visitor’s relationship with Wesleyan will last greater than 9 consecutive days, it is required that the visitor be present in the U.S. in a visa status that allows employment payments and receives payments through Payroll, regardless of the amount of the payment. An individual’s country of residence, not necessarily country of citizenship, determines if the individual is eligible for a tax treaty exemption. If a tax treaty exemption applies, then the 30% federal tax will not be withheld from most payments, if the appropriate paperwork is completed and signed by the visitor.
Steps Required when Requesting an Accounts Payable Payment for Honorarium/Services
- U.S. permanent residents, green card holders, follow the same procedures as U.S. citizens. Complete a Substitute W-9 for Individuals.
- A non U.S. citizen, who is not a U.S. permanent resident, must be present in the U.S. with a temporary immigration status. Confirm that the visa type allows payment by Wesleyan.
- Initiate the collection of the foreign visitor’s individual and visa information on a FNIF . The most important information needed is a SSN/ITIN and past and present visa types and dates.
- Contact Christine Rodrigue, x3502 or firstname.lastname@example.org to arrange a 15-20 minute appointment with visitors during their visit to campus. If possible, a 2-3 week notice is appreciated. Visitors should bring their passport and visa/visa waiver, and SSN/ITIN (if applicable).
- When completing a New Vendor Request, note in the Comments section that the vendor is a non U.S. individual.
- Payment will be approved when tax residency and withholding status has been determined, and all documentation is completed and signed.
- If it is determined that an individual is a non resident alien for tax purposes, then 14% or 30% federal income tax is required to be withheld from the payment, unless the individual is eligible for a tax treaty exemption benefit. The withholding percentage is based on visa type.
Steps Required when Reimbursing a Non U.S. Citizen
- Attach a Travel Expense form to the voucher.
- All receipts must be attached to the voucher, per the "Accountable Plan Rules".
- Attach a copy of the individual's visa to the voucher. Some visas do not allow reimbursements without tax implications, specifically student visas.
- A payment made to an entity, on behalf of a Non U.S. citizen, must also include a copy of the individual's visa entry stamp attached to the voucher.
Steps Required when making a Payment/Reimbursement to a Wesleyan International Student
See attached memo regarding the taxability of payments to Wesleyan international students.
Steps Required when Employing a Non U.S. Citizen
- If the non U.S. citizen is a permanent resident, treat them in the same manner as a U.S. citizen.
- A non U.S. citizen, who is not a permanent resident, must be present in the U.S. on a visitor’s visa. Confirm that the visa allows employment by Wesleyan.
- A non U.S. citizen is identified while completing an I-9, upon arrival in Human Resources. HR follows the policies and procedures for non U.S. Citizens Income Taxation. The non U.S. citizen is given a FNIF form to complete and is directed to contact Payroll for an appointment.
Completing an FNIF
A non U.S. citizen, non permanent resident, is required to complete a Foreign National Information Form. The form is electronically submitted to Christine Rodrigue.
Foreign Tax Issues Website
Find more information on payments to non U.S. citizens on our website.