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Non-Payroll Payments to Foreign Nationals

Information provided on this website is intended for the use of UNM departments and employees to provide general guidance on the immigration and tax issues that arise in the processing of payments to foreign persons.  Every effort is made to ensure the completeness and correctness of the information provided, however the information is not intended as tax advice and should not be relied upon for that purpose. 

General Information – W-8BEN/W-8BENE/W-9

UNM Purchasing Vendor Maintenance (vendors@unm.edu) requires either an IRS W-9 or W-8 form for all entities regardless of the type of payment. A faxed copy or emailed copy is not acceptable. The IRS requires the University of New Mexico to get an actual completed, ink signed and dated W-9/W-8 form mailed to the University.

Foreign Individuals or Entities (Non-U.S. Person/Entity, Non-U.S. Resident Alien)

There are currently five different types of W-8 forms. The most common forms that are received by the University are the Form W-8BEN and Form W-8BENE.  A brief description of each form is listed below along with the links to the various forms and their instructions.  Please refer to the instruction forms for specific details and explanations about each W-8 form.

W-8BEN (Individual)

Used by individuals to claim foreign status or claim treaty benefits for royalty/passive income.

Form - https://www.irs.gov/pub/irs-pdf/fw8ben.pdf
Instructions - http://www.irs.gov/pub/irs-pdf/iw8ben.pdf

W-8BENE (Entity):

Used by most foreign entities (non-individuals) to claim foreign status or treaty benefits.

Form - https://www.irs.gov/pub/irs-pdf/fw8bene.pdf
Instructions - https://www.irs.gov/pub/irs-pdf/iw8bene.pdf

Other types of W-8BEN forms, W-8ECI, W-8EXP and W-8IMY are available on the IRS website. 

Forms and Instructions can be obtained from the IRS website: http://www.irs.gov/

W-9 U.S. Individuals/Entities:

For U.S. federal tax purposes you are considered a U.S. Person/Entity if you are:
  • An individual who is a U.S. citizen or U.S. resident alien,
  • A partnership, corporation, company, or association created or organized in the United States or under the laws of the United States,
  • An estate (other than a foreign estate), or
  • A domestic trust (as defined in Regulations section 301.7701-7).

W-9 Form - http://www.irs.gov/pub/irs-pdf/fw9.pdf

W-9 Form Instructions - http://www.irs.gov/pub/irs-pdf/iw9.pdf

Hosting a Foreign Visitor

Due to federal taxation and immigration regulations, payments to foreign persons require a more stringent documentation and review process. UNM Taxation staff must review all non-payroll payments to foreign persons, including payments for foreign students.  This also includes payments made to a third party on behalf of the foreign person via direct pay, or UNM PCard. There are some types of payments that may be prohibited due to U.S. visa class limitations. Every effort should be made by hosting departments to ensure compliance with UNM Policy 2180.

  • Request a W-8BEN from visitor and obtain a UNM Banner ID number from UNM Vendor Maintenance/Purchasing
  • Review information below to understand the various types of payments, and tax implications.

After arrival

  • Verify the visa type listed on the passport or I-94 and ensure it is appropriate for the type of reimbursement or payment
  • Provide a copy of the U.S. visa, or passport if they are visiting from a from a visa waiver country.  Information page (name/picture/country of origin) and corresponding U.S. Homeland Security Stamp with date and visa class
  • Provide a copy of the I-94 or passport pages showing the WB/WT status and traveler information.
  • If they are arriving from another location inside the US or entered the US under an H-1B, J-1 or F-1 visa type from another institution, please also provide a copy of their I-797, DS-2019 or I-20 (all pages), respectively
  • Submit copies of the above documents in Lobo Mart under Foreign National Travel Form

Withholding on Payment to Foreign persons

If a payment is found to be either taxable or reportable, a Social Security Number (SSN) or an Individual Tax Identification Number (ITIN) will be requested in order to correctly issue a Federal Form 1042-S, Foreign Person's U.S. Source Income Subject to Withholding. Disclosure is voluntary, however foreign payees who do not disclose this information or who do not have an ITIN or a SSN may be subject to Foreign Tax Withholding. This number, if available, should be entered on the W-8BEN/W-8BENE form. A Canadian Social Insurance Number does not satisfy this requirement.  Detailed information about U.S. Tax withholding requirements can be found in IRS Publication 515 Withholding of Tax on Nonresident Aliens and Foreign Entities.

SERVICES

Services performed inside the U.S. by foreign persons are subject to U.S. taxation regulations and immigration compliance.  These payments are subject to 30% U.S. Federal tax withholding.   Publication 515 Withholding of Tax on Nonresident Aliens and Foreign Entities.

HONORARIA

Payments for honoraria can only be awarded to foreign individuals who entered the U.S. under a VWB, VWT, B-1 or B-2 visa class. Honoraria are considered by the IRS to be services. U.S. regulations include a 9-5-6 rule restriction. This means that services cannot extend beyond nine (9) days and the foreign person must attest they have not received more than five (5) other academic payments in the past six (6) months from all institutions in the U.S. Before an honoraria can be approved, a signed UNM B and VWB Attestation Form will be required.

Honoraria is considered services and is subject to 30% U.S. Tax withholding unless the payees is eligible for treaty benefits. See Treaty Benefits. Treaty Benefits require that the foreign national have a U.S. Taxpayer Identification Number (ITIN) or Social Security Number (SSN). Taxation staff will prepare the form for the visitor to sign and file the form with the IRS. The IRS must approve all treaty claims under Form 8233, and there is a 10 business day waiting period for this occur once the form has been filed with the IRS.  Please contact Taxation staff at tax@unm.edu if you wish to file a Form 8233 for your visitor.

Honoraria payments should be processed in Chrome River expense for the entire amount of the honoraria given.  The payment will then be adjusted by Taxation staff to account for the tax withholding and a journal voucher will be entered in Banner to record the tax withholding expense to the appropriate index.

TRAVEL

Foreign Travel Expense on UNM PCard

If a UNM PCard is going to be used to pay any portion of travel expenses (airfare, hotel, food) on behalf of a foreign person, who is not a UNM student or employee, you must submit a Foreign National Travel Request Form prior to making the purchase.

  • A signed W-8BEN and Banner ID must be obtained before you can submit the Foreign Person Travel Request Form – contact Vendor Maintenance vendors@unm.edu with questions
  • An approval email will be sent to the requestor. The approval email will outline the items that will be necessary in order to clear the PCard transaction for reconciliation. Departments should read the approval email carefully to ensure they understand the requirements and which documentation needs to be obtained. 

Travel - UNM Foreign Students

  • Travel expenses for UNM students that are not associated with UNM employment or with the presentation of UNM’s research are considered travel grants, and should be processed through the scholarship office.  The only travel expenses that should be reimbursed to students in Chrome River must have a clear University Business Purpose and meet the criteria of UNM’s accountable plan.  

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OTHER TYPES OF PAYMENTS:

Research Study Incentives

Payments to foreign persons, including UNM foreign students, for research study incentives are subject to 30% U.S. Federal tax withholding.  These payments should be processed in Chrome River expense for the entire amount of the incentive.  The payment will then be adjusted by Taxation staff to account for the tax withholding and a journal voucher will be entered in Banner to record the tax withholding expense to the appropriate index.

Royalties in the U.S.

Payments for royalties used in the U.S. are subject to U.S. Federal tax withholding. The majority of royalty payments are for software license purchases.  If the income is exempt or reduced under a treaty, the vendor must provide a U.S. Taxpayer ID (ITIN) on the W-8BENE and they must formally request the treaty exemption on the W-8BENE.   Any payments not eligible for treaty benefits will be reduced by 30% and a journal voucher will be entered in Banner to record the tax withholding to the appropriate index.

Non-scholarship Monetary Awards

Payments to foreign persons, including UNM students, for non-scholarship monetary awards are subject to 30% U.S. Federal tax withholding.  These payments should be processed in Chrome River expense for the entire amount of the award.  The payment will then be adjusted by Taxation staff to account for the tax withholding and a journal voucher will be entered in Banner to record the tax withholding expense to the appropriate index.

Reimbursements for the following types of payments should be processed in Chrome River Expense. These payment types are not subject to U.S. Tax withholding, and no visa documentation is required.

  • Subscriptions & Organization dues
  • Purchases of tangible goods (does not include software licenses-see Royalties above)
  • Registration fees for conferences outside the U.S

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Form 1042-S Reporting & Withholding

Foreign Person's U.S. Source Income Subject to Withholding – Reports the payments received and taxes withheld and paid to the IRS under the foreign person's name and address.  If tax has been withheld from research study incentives, royalties, honoraria, non-scholarship monetary awards or other tax reportable payments or if Treaty Benefits have been claimed, the foreign person will receive Form 1042-S by March 15th of the following year.  This form shows the gross amount paid and the amount of withholding.  This form can be used by the foreign person to file their U.S. tax return and request a possible refund from the IRS.  Refunds depend upon the facts and circumstances of each individual, and are not guaranteed. Taxation staff are not authorized to provide personal tax advice.  Please contact a professional tax preparer for assistance.

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Common Visa Classification

Below are the most common visa classifications that are typical for UNM visitors. 

B-1, B-2, VWB or VWT

This is a business class visa and it is the most common visa class issued to UNM foreign visitors for academic activities, such as lectures and presentations.  B-class visa holders are not authorized to be employed. Holders of business visa types (VWB or B-1) can be reimbursed for their travel and/or living expenses per UBPP 4030 Travel, for the period of time they are allowed to be in the US. Tourist visa type holders (VWT or B-2) may be reimbursed for their travel and/or living expenses per UAPP 4030 Travel for the period of nine days only.  Honoraria is subject to 30% foreign tax withholding. (see Honoraria above)

J-1

This is an exchange student, researcher, or teacher. All J-1 visa holders have a Form DS-2019, (formerly IAP-66), Certificate of Eligibility for Exchange national, issued by the institution sponsoring the visit in the U.S. J-1 visa holders sponsored by UNM may be employed by UNM. If UNM is not listed as the "sponsor", then we will need SEVIS written approval on their DS-2019 form, page 3, to pay the visitor for services or honoraria. Please include this approval from their sponsor with your request for payment.  Reimbursement for living expenses for a J-1 whose stay exceeds one year may require 14% foreign tax withholding.

Resources & References

IRS Publication 515 Withholding of Tax on Nonresident Aliens and Foreign Entities