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Payments to individuals may be made for a number of reasons, but it is important to determine the nature of the payment in each situation to ensure a proper method of processing and appropriate tax treatment.

Personal Service Agreement (PSA) must be issued prior to any commitment made for providing of services, and is presented to the service provider at the time the contract is arranged.

The Workday platform is used to submit requisitions, create purchase orders, process invoices, and other payments to individuals depending on your role in Workday. It consists of various tools to facilitate these processes including adding attachments, comments, etc.

Payment to an individual may be requested for the following:

• Providing a service as a vendor.
• Reimbursement of a purchase.
• Refund of a payment received by the university (this excludes tuition-related payments).

You pay individuals who provide one-time, specific services to ÍÃ×ÓÏÈÉú through Workday. Examples include: speakers, consultants, disc jockeys, etc. These services differ from ongoing work (which is covered under Human Resources).

When paying a single person as a service provider, that individual is acting as an independent contractor for the University. Accordingly, you must follow all listed steps for hiring and paying that individual. We cannot process payments without completion of these steps. We suggest that you allow plenty of time for this process when planning services. You must submit these forms for each occurrence unless all dates are listed on the agreement.

Process for Paying Independent Contractors      Independent Contractors FAQ

Reimbursement can be requested using the Expense Module in Workday based on worker role (with security access), using Create Expense Report for Non-Worker, to pay back individuals for personal payments made for University-approved purchases. Before you can Create an Expense Report for Non-Workers, you must request to have your non-ÍÃ×ÓÏÈÉú individual added by submitting a “Create Request” task for External Committee Member Set-Up in Workday. (You will be expected to provide their full (legal) name, phone number, mailing address, and email address as well as a W-9 (this is to reduce the possibility of fraud).)

Note: All payments to External Committee Members must be paid with a paper check, mailed to the mailing address provided.) As stated in the Purchasing Handbook, reimbursements are specifically discouraged unless under the most extreme circumstances (see Purchasing Handbook 1.02).

Reimbursements must be submitted within 60 days from the date of the expense or they can be considered a taxable benefit.

Also, no purchase from Amazon.com can be reimbursed without prior approval by the Office of Strategic Procurement.

In certain cases, you may submit a request for a refund of payment in Workday based on worker role (with security access), using Create Supplier Invoice Task. Refunds return a portion of a payment to the individual.

Please note: You will need to provide an explanation for the refund in Workday. You must also specify the payee's residency status.

Definitions:

A participant is an individual who is attending a workshop, conference, seminar, symposium, or
other short-term instructional or information sharing activity funded by a sponsored award (grant).

Participant Support Costs are defined in as direct costs for items such as stipends or subsistence allowances, travel allowances, and registration fees paid to or on behalf of participants or trainees (but not employees) in connection with conferences or training projects (2 CFR 200.75).

Participant support costs paid to the participant as stipends and/or allowances are considered taxable income by the IRS.

A conference is defined in 2 CFR 200.432 as a meeting, retreat, seminar, symposium, workshop, or event whose primary purpose is the sharing and dissemination of technical information and is necessary and reasonable for successful performance under the funded award.

Individuals who are participating as human subjects in a research study are NOT considered to be participants as defined above, and this guidance would NOT apply to paying these individuals.

Business Process and Responsibilities

PI and the Office of Research and Innovation are responsible for review of awards/grants documentation and verification if an individual meets a definition of participant, and if payment can be qualified as participant support cost. They also have to make sure that payment is included in the Participant Support section of the grant budget.

In order to process payment, department needs to request a participant to be set up as supplier in Workday and submit the form completed and signed by participant.

After the supplier set up request has been processed by Accounts Payable, payment to a participant can be initiated in Workday (with security access) depending on your role, using Create Supplier Invoice Task.

A person requesting a payment has to include a following comment in Workday, and copy comment to Ms. Anne Schauer, the Director of Research and Sponsored ÍÃ×ÓÏÈÉú.

This person is being paid as a participant on an externally funded grant. Participants are defined in 2 CFR 200.1 as individuals receiving stipends or subsistence allowances, travel allowances, and registration fees paid to or on their behalf as participants or trainees (but not employees) in connection with a grant funded conference, or training project.

Please don't attach the W9 form or any other document containing sensitive personal information to the payment request in Workday.

Requests for payments to participants are reviewed and approved by the requesting Department as well as Office of Grants to ensure appropriate funding allocation and compliance with grant/award terms.

In addition, all payments to participants paid from externally-funded grant awards must comply with cost principles per OMB's Uniform Guidance.

Taxation and reporting

Payments to participants are subject to U.S. tax laws. The IRS treats payments for participants as taxable income to the recipient. This means the recipient is responsible for reporting the payment when they file a personal tax return at the end of the year. ÍÃ×ÓÏÈÉú University is required by the IRS regulations to issue Form 1099-MISC for all US residents paid $600 or more in a calendar year.

If grant /award terms contain specific tax requirements, these requirements must be fully disclosed and attached to the payment request in Workday for the tax treatment review.

Taxation and reporting requirements for foreign nationals (Non-US Citizens)

If payment is requested to a foreign national (Non-US Citizen), it must be indicated on the To Do Step after entering a supplier invoice. If a payee is not a US citizen, they are considered a non-resident alien for tax purposes unless they are a green card holder or they passed the substantial presence test defined by the IRS and performed by the Payroll Services. Please note that the test is based on how many years the individual has been present in the US, not their immigration status.

In order for Payroll Services to perform the substantial presence test, a participant will be required to provide all relevant documentation including copy of visa, passport, form I-20 or DS-2019, I-94 with travel history included, and a completed Foreign National Information form. Please visit the Payroll Office or email Sr. Payroll Analyst, Holy Neill at neillh@miamioh.edu for additional question related to documents submission.

Any payments to participants who are determined to be a non-resident alien for tax purposes, regardless of amount, are subject to 30% automatic tax withholding unless the non-resident payee is claiming a tax treaty benefit. Payments to foreign nationals are reported on Form 1042-S.

The table below provides a quick guide to the documentation you will need to pay for common services that individuals provide.