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Non-Payroll Payments to Foreign Nationals


General Information

Types of IRS Forms – W-9 (U.S. Persons) and W-8s (Foreign Nationals or Foreign Entities)

UNM Purchasing Vendor Maintenance (vendors@unm.edu ) requires either an IRS W-9 or W-8 form for all foreign nationals/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.

W-9: Used by U.S. Persons. For federal tax purposes you are considered a U.S. Person 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 theUnited 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).
  • If you are a nonresident alien who becomes a resident alien for tax purposes and who is relying on an exception contained in the saving clause of a tax treaty to claim an exemption from U.S. tax on certain types of income, you must attach a statement to Form W-9 that specifies the following five items:
    1. The treaty country. Generally, this must be the same treaty under which you claimed exemption from tax as a nonresident alien.
    2. The treaty article addressing the income.
    3. The article number (or location) in the tax treaty that contains the saving clause and its exceptions.
    4. The type and amount of income that qualifies for the exemption from tax.
    5. Sufficient facts to justify the exemption from tax under the terms of the treaty

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

For foreign vendors, there are currently five different types of W-8 forms. The foreign national/entity will need to determine which type of form applies to them; they will need to fill out the appropriate form; and they will need to mail the form to the department making the request.A brief description of each form is listed below along with the links to the various W-8 forms and their instructions.  Please refer to the instruction forms for specific details and explanations about each W-8 form.

Individuals not eligible for the other W8 forms should use the W-8BEN.

W-8BEN: Used primarily by individuals to claim foreign status or claim treaty benefits for royalty/passive income.

  •  A U.S. tax identification number (TIN) or Foreign Country of Residence tax identification number is required for exemption from tax withholding.
  •  All fields in line 10 must be completed to claim exemption on Royalty payments.

W-8BEN-E: Used primarily by foreign entities (non-individuals) to claim foreign status or treaty benefits. –Required after September, 2014, the 2006 version of the W-8BEN form found at  http://www.irs.gov/pub/irs-prior/fw8ben--2006.pdf may be used until then.

  •  A U.S. tax identification number (TIN) or Foreign Country of Residence tax identification number is required for exemption from tax withholding.

W-8ECI: Used primarily by the payee or beneficial owner indicating that all the income that is listed on the form is effectively connected with the conduct of a trade or business within the United States.

  • The type of income must be identified on Line 9 of the form to qualify for exemption. If it is not listed we are required to obtain from the entity a different type of W8 form.
  • A U.S. tax identification number is required for exemption from tax withholding.

W-8EXP: Used by the following entities to claim exemption from tax withholding-  foreign governments, U.S./IRS recognized foreign tax exempt organizations and foreign private foundations, govt. of a U.S. possession, or foreign central bank of issue.

  • The entity must be claiming exemption under IRS code 115(2), 501 (c), 892, 895 or 1443(b). Otherwise they need to file a W-8BEN or W-8ECI.
  • A U.S. tax identification number is generally required for exemption from tax withholding.

W-8IMY: Used by an intermediary, a withholding foreign partnership, a withholding foreign trust, or flow through entity.

  • Copies of appropriate withholding certificates, documentary evidence, and withholding statements must be attached to the W-8IMY as well.

Form W-8BEN- Note: Most individuals will fill out a W-8BEN

http://www.irs.gov/pub/irs-pdf/fw8ben.pdf

Instructions for W-8 BEN

http://www.irs.gov/pub/irs-pdf/iw8ben.pdf

Form W-8BEN-E   Note: Most non-individuals will fill out a W-8BEN-E

http://www.irs.gov/pub/irs-pdf/fw8bene.pdf

Instructions for W-8 BEN-E

http://www.irs.gov/pub/irs-pdf/iw8bene.pdf

Form W-8ECI

http://www.irs.gov/pub/irs-pdf/fw8eci.pdf

Instructions for Form W-8ECI

http://www.irs.gov/pub/irs-pdf/iw8eci.pdf

Form W-8EXP

http://www.irs.gov/pub/irs-pdf/fw8exp.pdf

Instructions for Form W-8EXP

http://www.irs.gov/pub/irs-pdf/iw8exp.pdf

Form W-8IMY

http://www.irs.gov/pub/irs-pdf/fw8imy.pdf

Instructions for Form W-8IMY

http://www.irs.gov/pub/irs-pdf/iw8imy.pdf

Please send Original forms to Purchasing Vendor Maintenance MSC01 1240, 1 University of New Mexico, Albuquerque, NM 87131

UNM Taxation staff are not allowed to accept the risk for advising outside vendors on how they should fill out a legal attestation.  IRS W-9 forms and W-8 forms are legal attestations made by the vendor.  Only the vendor themselves can determine what type of entity they are.

Types of Payments

Fees for services

"If you are a U.S. citizen or resident alien, your worldwide income generally is subject to U.S. income tax, regardless of where you are living. Also, you are subject to the same income tax filing requirements that apply to U.S. citizens or resident aliens living in the United." IRS Publication 54, Tax Guide for U.S. Citizens and Resident Aliens Abroad.   http://www.irs.gov/pub/irs-pdf/p54.pdf

Payment for services to any person or company that has not legally shown that they are a foreign individual or entity, via a signed IRS W-8 form, will be treated as subject to  28% backup withholding reported on Form 1099-Misc; unless a valid U.S. Taxpayer Identification Number is provided.  A foreign address is not legal proof that a payee is foreign.

Fees for services performed inside the U.S. by Foreign Nationals or Foreign companies are subject to US Taxation Regulations.

Payments paid directly to or to a third party on behalf of foreign nationals require a more stringent documentation and review process per federal law. In addition to normal UNM UBPP requirements, UNM Taxation Issues Staff must approve all non-payroll payments to these FN payees or vendors, as well as payments to foreign students.  There are some types of payments that may be prohibited to FNs who enter the US with certain types of visas.  If the 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. FN vendors who do not disclose this information or who do not have a TIN or a SSN may be subject to Foreign Tax Withholding. A Canadian Social Insurance Number does not satisfy this requirement.

It is not possible to list all the different facts and circumstances that might surround payments to or for a Foreign national invited to UNM. This web page only offers information on the most common visa types that UNM foreign visitors enter the US under. You may want to review the IRS Publication 515 Withholding of Tax on Nonresident Aliens and Foreign Entities. We suggest that initiating Departments please contact Taxation Issues staff for further information.

Note: For Foreign Nationals who enter the US, Homeland Security documentation must be obtained/copied while the national is in the U.S.  Persons from a visa waiver country must present a copy of the page of their passport that shows their name, picture and their country of origin and a copy of the page inside that includes the oval HomeLand Security stamp dated for this visit to UNM/US. For other, non-visa waiver countries, this same information pages will be found in their US Visa.

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Pre-approval for use of P-Card for Foreign National Travel

If a P-Card is going to be used to pay any portion of travel expenses (airfare, hotel, food) on behalf of foreign national, who is not a UNM student or employee , Taxation must approve before purchasing. Please read the following before submitting this form:

  • Your PCard must have the Travel option added in order to pay for lodging expenses.
  • A copy of the formal  "Letter of Invitation", on UNM letterhead, signed by UNM staff, that was sent to the foreign national will be requested by UNM Taxation if your foreign visitor is coming from outside the United States. This will be required at the U.S. border entry to insure that your foreign visitor receives the less restrictive Business visa type instead of a Tourist visa type.  The letter must be produced by your foreign visitor at the U.S. border.  Please email the letter to tax@unm.edu or fax to 277-7662..
  • Taxation staff may require more information before approving the purchase. It is possible that payment may not be allowable dependent upon the facts and circumstances.
  • Approval will be for Foreign Tax purposes only and is >pending receipt>of a copy of the foreign national's Oval Homeland Security Stamp that they received upon entry into the US for this visit, along with a copy of their picture and name page. This will be found in either their visa or passport documentation.
  • When your sponsored foreign national arrives in the US, please send this documentation to Unrestricted Accounting Main, MSC01 1260 Taxation or fax to (505) 277-7662 referencing the foreign national's name and Banner ID, if they have one.
  • We suggest that you have the Foreign National sign a W-8BEN form (see first paragraph on this web page) while they are here. This form is required for Vendor Set-up.
  • Please keep a copy of the approval email in your Department PCard log. Please send it to Purchasing onlywith your PCard log for their review.
  • In addition to the electronic  form that must be filled out  and submitted, if your foreign visitor is arriving from outside the US, Taxation requests  a  copy of the  letter of invitation that was sent to the foreign visitors because this will ensure that they get a ‘business’ visa type.  When your foreign visitor arrives in the US, their passport and visa documents will be processed by the US Border Customs Agent.  If they can produce a letter of invitation from your department  1>on UNM letterhead , 2>with their name , 3>the dates they will be in the US,  4>a business purpose/reason why they are being invited, and 5>signed by a UNM employee ; they will receive a visa stamp other than tourist . There are specific situations where a tourist visa may impede the length of their stay or limit the types of payments or reimbursement that may be made to or for them. If your foreign visitor is already inside the US, a letter of invitation is not required.

  • To request a approval , please click on the link to access the Foreign National Travel Request Form. One form must be filled out for every foreign visitor.

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OTHER TYPES OF PAYMENTS:

  • Subscriptions & Organization dues
  • Purchases of tangible goods
  • Registration fees for conferences out side the U.S
  • Services performed outside the U.S. by Foreign Nationals (A legal, signed W-8 attestation form is required to prove a person is not a U.S. person who is subject to U.S. 1099 reporting.)
For these types of payment above, submit Direct Pay Approval Form (DP-EZ) to Taxation for approval. No visa documentation is required.
Travel
Payments for travel reimbursements to FNs nationals, who are not UNM students or staff, either made directly to the FN or to another on behalf of the FN, require a copy of their Visa or the Passport (if they are from a visa waiver country) – the  front page with the Foreign national's picture/ country information and the page with the  oval U.S. Home Land Security Stamp dated for this visit to the US.  A business purpose that demonstrates how the University benefits from this travel is also required.  Submit this information attached to the Direct Pay Approval Form/DPEZ to Taxation Issues at MSC01-1260 for approval.

Travel - UNM Foreign Students

Payments for travel reimbursements to UNM Foreign students may need to be paid through the Scholarship Office and be subject to 14% federal foreign tax withholding. 

Awards that pay for travel expenses that appear to benefit the student should be paid through the Scholarship Office.  In order to give students the most beneficial and correct treatment of any travel award payments to them, I would like to let you know that there are parameters where an award could go through Accounts Payable instead of the Scholarship office.

  • If they are presenting the research findings of a UNM faculty member, where they assisted in the research, etc., this could be considered a UNM benefit purpose - then the payment could go on a DPEZ.

Or,

  • If the student returns from the conference and presents what they learned to others in the UNM community, this could be considered a UNM benefit as well purpose - then the payment could go on a DPEZ.

 Or,

  • If 1>there is a request for submission of research presentations which are reviewed by a conference committee and only the best are selected and accepted; AND  2>they are requested to make a presentation while representing UNM, AND 3> this presentation is not a requirement for their degree AND 4> it is clearly explained WHAT the benefit to the University is in the business purpose - then the payment could go on a DPEZ.

Or,

  • If this is a student employee and the travel is related to their work assignment, such as completing supervision, reading meters, or transporting equipment, and the business purpose includes this information - then the payment could go on a DPEZ.

Or,

  • If this is a student’s travel is non-degree related and reflects a Student Organization activity through Student Government Accounting, and  the business purpose includes this information - then the payment could go on a DPEZ.
Participant Fees
Payments to Foreign Nationals, including UNM foreign students, for participant fees may require 30% foreign tax withholding. If so, the DPEZ payment document should be made for 70% the gross amount of the participant fees. UNM Taxation staff will create a JV to charge the tax. Please contact Taxation Issues staff for assistance.
Royalties
A Foreign Entity receiving royalties must provide their address in their country of residence. Even though these foreign entities never enter the U.S (so, no Visa or oval Homeland Security documentation are required); typically, unless vendor has a 1>US tax ID number (TIN or SSN) and 2>treaty benefits are available and 3>claimed treaty benefits in writing, there will be a 30% withholding required. Please contact Taxation Issues staff for assistance.
Honoraria
Payments for honoraria can only be awarded to foreign nationals who entered the U.S. under a VWB, VWT, B-1 or B-2 visa type. Required documentation includes a copy of Name/Picture page and the page containing the oval Homeland Security stamp dated for this visit to the US (located inside either their U.S. visa or their Passport if they are from a visa waiver country), and a business purpose that demonstrates how the University will benefit from this expense. 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 FN must attest they have not received more than five (5) other honoraria payments in the past six (6) months, via a signed UNM B and VWB Attestation Form. This documentation and information should be submitted to Unrestricted Accounting Main, Taxation Issues staff at tax@unm.edu for approval attached to the DPEZ-Direct Pay Approval form. Federal Form 1042-S reporting and/or withholding of 30% may be required. See Treaty Benefits. Note: Treaty Benefits require that the foreign national have a US Taxpayer Identification Number. Visa types other than B-1, B-2, VWB or VWT  are not allowed an honorarium payment. Please contact Taxation for further instructions or questions.
Non-scholarship Monetary Awards
Payments to Foreign Nationals, including UNM foreign students, for Monetary Awards that are not scholarships, may require 30% foreign tax withholding. If so, the DPEZ payment document should be made for 70% the gross amount of the participant fees. UNM Taxation staff will create a JV to charge the tax. Please contact Taxation Issues staff for assistance.

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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 national's name and address..  If tax has been withheld from participant fees, royalties, honoraria, non-scholarship monetary awards or other tax reportable payments or Treaty Benefits have been claimed , the FN will receive Form 1042-S by March 15th of the following year.  This form shows the gross amount paid and the amount of withholding and can be used by the foreign national on their US tax return to file and request a possible refund from the IRS.

SSN (Social Security Number)- The national can apply to the Social Security Administration for an SSN on Form SS-5. Please click here for more information. It takes about 2 weeks to issue the number after all required information has been received. A Canadian Social Insurance Number does not satisfy this requirement.

ITIN (Individual Taxpayer Identification Number) - The national can apply to the IRS for an ITIN on Form W-7. Please click here for more information. It can take 6-8 weeks to issue the number after all required information has been received.

Note:  The Federal Application Forms SS-5 and W-7 should not be submitted to UNM.  The instructions to each of those forms contain information on where they should be submitted.

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Most Common Type of UNM FN Visitors

Visa type B-1, B-2, VWB or VWT (B type Visa):
This is a business visa type given to foreign nationals. It is the most common way for an FN to enter the country to give presentations or lectures; and then be paid an honorarium. See Honoraria topic above. FN who enter the US under a B Visa type are not allowed 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 dated on the oval Homeland Security stamp they receive for this visit to 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 may require 30% foreign tax withholding.
Documentation required:
  • By Purchasing Vendor Maintenance (vendors@unm.edu)  Form W-8BEN, signed by the FN visitor which includes their foreign address and country of residence
  • If claiming Treaty Benefits  a US SSN (Social Security Number ) or ITIN (Individual Taxpayer Identification Number)- Without Treaty Benefits, 30% foreign tax withholding will apply.
  • Copy of the page showing their name and picture, either in their U.S. or their Passport if they are from a visa waiver country
  • Copy of the page showing the blue, oval U.S. Homeland Security stamp dated for this visit to UNM/US
  • B1 and VWB Attestation Form , signed
  • Form W-8BEN, signed by the FN visitor (please send this form to Purchasing Vendor Set up)
  • Form 8233, Taxation Issues staff will prepare this form to be signed in two places by the foreign national, if claiming Treaty Benefits. Their U.S. Federal Individual Taxpayer Identification Number (ITIN) is required for claiming treaty benefits. The IRS must approve 8233s, and they have ten working days to do so. Please plan your payment date around this.
Visa type J1:
This is an exchange student, researcher, or teacher. All J1's 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. J1's 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 FN for services/honoraria. Please include this approval from their sponsor with your request for payment or provide the sponsoring organization contact information to Taxation and we will request this approval. Reimbursement for living expenses for a J-1 whose stay exceeds one year may require 14% foreign tax withholding.
Documentation required:
  • By Purchasing Vendor Maintenance (vendors@unm.edu)  Form W-8BEN, signed by the FN visitor which includes their foreign address and country of residence
  • If claiming Treaty Benefits  a US SSN (Social Security Number ) or ITIN (Individual Taxpayer Identification Number)- Without Treaty Benefits, 30% foreign tax withholding will apply.
  • Copy of the page showing their name and picture, either in their U.S. or their Passport if they are from a visa waiver country
  • Copy of the page showing the blue, oval U.S. Homeland Security stamp dated for this visit to UNM/US
  • Copy of Form DS-2019, all three pages, that indicates that payment for services is allowed per SEVIS approval of OPT or CPT or or a Letter from their sponsoring institution stating the services were approved by SEVIS and authorizing travel reimbursement payment (only if FN is not sponsored by UNM), signed by that institution's RO or ARO. (only if UNM is not their sponsor)
  • Form 8233, Taxation Issues staff will prepare this form to be signed in two places by the foreign national, if claiming Treaty Benefits. The IRS must approve 8233s, and they have ten working days to do so. Please plan your payment date around this.

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