[Minor revision–posted 9/16/20 (replaces 2/29/16 edition)]
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Operating Policy and Procedure

OP 69.11: Payments to Nonresident Aliens

DATE: September 16, 2020

PURPOSE: The purpose of this Operating Policy/Procedure (OP) is to establish the method by which payments to nonresident aliens shall be processed, including review and approval prior to payment.

REVIEW: This OP will be reviewed in November of odd-numbered years by the Chief Payroll Officer with substantive revisions forwarded to the Vice President for Administration & Finance and Chief Financial Officer.

POLICY/PROCEDURE

1.  Policy Statement

All payments made by Texas Tech University (TTU), or related entities, to any individual or entity that is a nonresident alien shall be made in compliance with Internal Revenue Code (IRC) §1441 and related Treasury Regulations promulgated thereunder. For purposes of this OP, a nonresident alien is defined as any individual or entity that is not a United States citizen or not a permanent resident alien.

2.  Type of Payments Covered by Policy

This policy applies, but is not limited, to the following types of payments:

a.    Wages, salaries, or compensation paid to a nonresident alien employee;

b.    Fees, honorariums, or stipends paid to a nonresident alien visiting speaker, lecturer, or performer;

c.    Scholarships, stipends, discounts, or waivers paid to a nonresident alien student;

d.    Service and/or non-service fellowships paid to a nonresident alien researcher;

e.    Any payments made to third parties on behalf of a nonresident alien;

f.    Travel reimbursements paid to a nonresident alien;

g.    Royalty payments to a nonresident alien;

h.    Cash, cash equivalent, and noncash prizes, awards, and participant payments made to a nonresident alien; and

i.    All other payments made to or on behalf of a nonresident alien.

3.  Procedure for Common Types of Payments

a.    Payments to Employees

For a new nonresident alien employee, the employee service coordinator must provide Payroll & Tax Services (tax.forms@ttu.edu) with the following:

(1)    Employee's name;

(2)    Employee's Banner ID (R#);

(3)    Employee's email address (not required to be TTU email address); and

(4)    Pay period (semi-monthly or monthly).

Payroll & Tax Services (Tax) will send the employee an email notification with username and password to access GLACIER (a nonresident alien tax compliance system). The employee will be required to provide information through GLACIER, which is accessible from any web-based computer, and provides data-entry screens to enter name, local and foreign address, immigration information, etc. Based on the data entered, the employee will be provided all tax forms and documents that are required to be signed and returned to Tax. It is the employee's responsibility to keep his/her information updated. Important tax information, including Form 1042S, will be available through GLACIER. If information is not provided and/or required forms and documents are not submitted to Tax in a timely fashion, the maximum amount of tax will be withheld from all payments.

b.    Payments to Students

When a scholarship is awarded to a nonresident alien student, the awarding unit must provide Tax with the following:

(1)    Student's name;

(2)    Student's Banner ID (R#); and

(3)    Student's email address (not required to be TTU email address).

Tax will send the student an email notification with username and password to access GLACIER. The student will be required to provide information through GLACIER, which is accessible from any web-based computer, and provides data-entry screens to enter name, local and foreign address, immigration information, etc. Based on the data entered, the student will be provided all tax forms and documents that are required to be signed and returned to Tax. It is the student's responsibility to keep his/her information updated. Important tax information, including Form 1042S, will be available through GLACIER. If information is not provided and/or required forms and documents are not submitted to Tax in a timely fashion, the maximum amount of tax will be withheld from all payments.

c.    Payments to Visiting Speakers/Lecturers and Guest Artists/Performers

A department inviting a visiting speaker/lecturer or guest artist/performer ("guest") to TTU should contact both the Office of International Affairs (OIA) and Tax prior to the guest's arrival on campus. OIA will work with the department and guest to ensure that TTU can legally make a payment to the guest pursuant to United States immigration laws.

Tax will provide the guest, by email, with the necessary information to access GLACIER. The guest will be required to provide information through GLACIER, which is accessible from any web-based computer, and provides data-entry screens to enter name, local and foreign address, immigration information, etc. Based on the data entered, the guest will be provided all tax forms and documents that are required to be signed and returned to Tax. It is the guest's responsibility to keep his/her information updated. Important tax information, including Form 1042S, will be available through GLACIER. Please note that an individual must have a social security number (SSN) or a United States individual tax identification number (ITIN) in order to claim a tax treaty benefit. If the guest does not have an SSN or ITIN or the required information is not obtained, tax must be withheld at the rate of 30 percent.

A department may reimburse travel expenses of a guest under the accountable plan rules. The department must provide original receipts for any travel expenses that are to be reimbursed. No tax will be withheld from these types of expense reimbursements.

d.    All Other Payments to Nonresident Aliens

For all other payments to nonresident aliens, the department should contact Tax prior to making such payment. Please note that if a payment is incorrectly processed without the required tax withholding, the department will be charged the applicable tax. Since this is actually a gross up (i.e., paying tax on tax), the tax rate for scholarship payments is 16.2 percent and the tax rate for all other payments is 42.8 percent. Tax cannot be paid with federal funds.

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