|Approved by:||The President|
|History:||Issued -- March 14, 2001|
|Revised -- September 23, 2013|
|Last Reviewed -- July 31, 2019|
|Related Policies:||Honoraria Policy; Travel Policy|
|Additional References:||IRS - General ITIN Information; Payments to Foreign Nationals at a Glance|
|Responsible Official:||Vice President for Finance and Treasurer tel. (202) 319-5606|
I. Policy Statement
The University may, in the course of normal business operations, be required to make payments or reimbursements to individuals who are not permanent residents or citizens of the United States ("non-resident aliens"). All such payments must follow the requirements of United States immigration and tax laws and the requirements set forth in this policy. Departments or individuals should not make financial commitments to non-resident aliens until they understand this policy and their responsibility in the process.
The process for making payments to non-resident aliens requires that the non-resident alien provide certain tax documents that can take up to several months to obtain. Accordingly, the department proposing to make the payment must allow adequate time for processing in advance of the desired payment date.
This policy applies to all payments to non-resident aliens, including honoraria. Payments of honoraria also must comply with the University's Honoraria Policy. This policy does not apply to services performed outside the U.S. by a non-citizen, non-resident or to a foreign business performing services outside the U.S.
A. Non Resident Alien means any individual who is not a U.S. citizen or U.S. national. A non-resident alien is an alien who has not passed the green card test or the substantial presence test.
III. Requirements for Payments to Non-Resident Aliens
A. Determining the Permissibility of the Payment
Payments will not be made to individuals who are subject to U.S. economic or trade sanctions per the U.S. Office of Foreign Assets Control (OFAC). Individuals subject to such sanctions are listed on OFAC's Specially Designated Nationals List (SDN). Departments proposing to make payments to non-resident aliens should check this list in advance of making payment arrangements.
Prior to making payments to non-resident aliens, the University also must determine whether the payment is allowed under United States immigration laws. Accordingly, departments proposing to sponsor someone on a student (F), scholar/teacher (J), or a temporary worker in a specialty occupation (H-1B) visa must coordinate with the Office of International Student and Scholar Services (ISSS) in advance so that a determination can be made as to whether the payment is permissible based on the visitor's visa status. ISSS may be reached at tel. (202) 319-5618. For immigration eligibility requirements, please also visit http://international.cua.edu/immigrationbasics/index.cfm.
Departments must not ask a prospective payee about his or her specific citizenship or immigration status, but may inquire if the prospective payee is authorized to work in the United States, and/or whether he/she will require visa sponsorship.
B. Obtaining a Federal Tax Identification Number
If payment to the non-resident alien is permissible based upon that individual's visa status, the non-resident alien still must obtain a federal individual tax identification number (ITIN) from the Internal Revenue Service (IRS). The ITIN needs to be obtained in advance of any payment requests. IRS processing of an ITIN can take several months. Note that the responsibility to obtain the ITIN rests with the non-resident alien to be paid and that University personnel cannot assist in that process since it is an individual tax matter. The non-resident alien may obtain information and forms for obtaining an ITIN from the Internal Revenue Service (IRS) at http://www.irs.gov/Individuals/General-ITIN-Information.
1. Travel Reimbursements to Foreign Nationals
Unlike honorarium payments, short-term visitors may be reimbursed for travel expenses without having a Social Security Number (SSN) or ITIN number. In order to be reimbursed, the visitor must be present in the U.S. on a B-1, B-2, VWP, H1B, F-1, or J-1 visa. The process for reimbursing travel expenses for such individuals follows standard University travel reimbursement procedures per the University's Travel Policy. Note, however, that for the University to legally reimburse a foreign national for travel expenses, the department must submit a copy of the picture page of the passport, U.S. visa, and I-94 documentation to ISSS for approval along with the travel reimbursement request. The Department may forward the ISSS approved travel reimbursement request to Accounts Payable for processing.
IV. Payment Processing
Payments to non-resident aliens with employee status are made through the Payroll Office. Other payments, such as payments to independent contractors or honoraria payments, are made through the Accounts Payable Office. Payment cannot be processed in either of these offices without the ITIN and pre-coordination with ISSS. Therefore, the department must allow adequate time (ideally two months) for processing in advance of the desired payment date.
V. Taxability of Payments
Non-resident aliens are taxed only on their U.S. source income, but generally at a higher rate of tax than U.S. citizens and permanent resident aliens. However, a tax treaty reduces the tax liability on the income. The Payroll Office or Accounts Payable Office can provide information on whether there is a tax treaty with the payee's country of residence and the form for claiming those treaty benefits; however, they cannot process the relevant tax forms or payment without an ITIN.
Payments made to or on behalf of a non-resident alien for reimbursement of travel and lodging expenses are excludible from the gross income of the non-resident alien. This income is not reportable to the IRS by the payer on the condition that the requirements of the IRS rules are met. ISSS, the Payroll Office, and the Accounts Payable Office cannot offer tax advice or complete any individual tax forms.