Non-Payroll Payments to Foreign National


General Information

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

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. A brief description of each form is listed below along with the links to the various W-8 forms and their instructions.  The vendor/payee will need to determine which form correctly applies to them.

W-8BEN - for use by foreign individuals

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

IRS W-8BENE - for use by foreign entities

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:

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

W-8ECI - Income effectively connected in the U.S.

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 - Certificate of Foreign Government or Organization

Used by the following entities to claim exemption from tax withholding- foreign governments, U.S. Internal Revenue Service 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.

U.S. Individuals/Entities:

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 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

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 States." 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 24% 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 U.S 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 staff must approve all non-payroll payments to foreign persons including payments to or on behalf of foreign students..  There are some types of payments that may be prohibited to foreign persons who enter the U.S. 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. 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. 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 but it is not inclusive of all visa types. 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 staff if you have questions before inviting a foreign visitor to UNM.

In addition to a signed W-8BEN, a copy of the U.S. Citizenship and Immigration (USCIS) documentation must be obtained/copied while the foreign visitor 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 U.S. Home Land Security stamp dated for their visit to UNM.  For other, non-visa waiver countries, the information pages will be found in their U.S. Visa.

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PCard Pre-approval for Foreign National Travel

If a UNM PCard 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, pre-approval must be obtained prior to purchasing on PCard. Please read the following before submitting this form:

A UNM vendor ID number is required on the Foreign National Travel Request form.  Please submit your request for a UNM vendor ID by obtaining a W-8BEN from the vendor and attach the form to your request in LoboMart. W8-BEN http://www.irs.gov/pub/irs-pdf/fw8ben.pdf.

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

    • 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.
    • Pre-approval is for purposes of booking travel only.  Final approval of the transaction is pending receipt of required immigration documentation.  Details for required followup information will be contained in the approval email which you will receive after submission of the request.

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OTHER TYPES OF PAYMENTS:

  • Subscriptions & Organization dues
  • Purchases of tangible goods
  • Registration fees for conferences out side the U.S
For these types of payment above, no visa documentation is required.
 
Travel
 
Non-UNM Employee/Student
 
Payments for travel reimbursements to or on behald of foreign persons, who are not UNM students or staff will require a copy of their Visa or the Passport (if they are from a visa waiver country)
 
  • Information page (Name/Picture/Country of Origin)
  • U.S. Homeland Security Stamp dated for visit to UNM
  • Reimbursements must meet all applicable UNM business policies and procedures
  • Reimbursements not in compliance with Accountable Place Requirements will be taxable and reported on IRS Form 1042-S

Travel - UNM Foreign Students

Payments for travel reimbursements to UNM foreign students that do not meet a UNM business purpose should be processed through the Scholarship Office.  These awards are typically subject to 14% withholding.
Travel - UNM Employees
 
Payments for travel reimbursements to UNM employees will be subject to UNM business policy and accountable plan requirements. Taxation Pre-approval for PCard travel is not required.
 
 

Participant Fees

Payments to foreign persons, including UNM foreign students, for participant fees require 30% foreign tax withholding.
 
Royalties
Foreign entities or persons receiving royalties are typically subject to 30% tax withholding.  Becasue these foreign entities or persons typically do not  enter the U.S., visa documentation is not required.  Treaty benefits may be available in some cases. Please contact Taxation staff if your vendor requests treaty benefits.  Please note, treaty benefits must be requested in writing, and the payee must have a U.S. Taxpayer ID (TIN) or Social Security Number (SSN).
 
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
  • Visa/Passport Information page (Name/Picture/Country of Origin)
  • U.S. Homeland Security Stamp dated for visit to UNM
  •  B and VWB Attestation Form 
    • 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 visitor must attest they have not received more than five (5) other honoraria payments in the past six (6) months
  •   All honoraria payments to foreign persons are subject to 30% withholding unless treaty benefits apply
  • To obtain treaty benefits the payee MUST has a U.S. Taxpayer ID (TIN) or Social Security Number (SSN).  IRS Form 8233 must be completed by the payee.  Contact Taxation staff for assistance.
For other restrictions and information please see Honorarium Payments http://ua.unm.edu/honorarium-payments.html
 
Non-scholarship Monetary Awards
Payments to foreign persons for non-scholarship monetary awards require 30% tax withholding.

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

W-8BEN:

Most individuals will fill out a W-8BEN

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

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