Policy/Procedure: 101-Payments to Individuals
Date: 06/09/2010 (Last updated: 09/10/13)


Statement of Policy

The Payment to Individual Report (PIR) is used to request all payments to individual non-employees. In the process of fulfilling their mission to instruct, conduct research, and perform public service, departments within the University of Wisconsin-Madison may find it necessary to pay individuals who are not employed by the university. An individual is defined as "a person who is not a company, partnership, corporation, association, organization, trust or estate, and for whom an employer-employee relationship does not exist." See FPPP #31 for more details. This policy includes paying individual non-employees for goods and services, prizes and awards, fellowships, and scholarships. Travel and expenses are reimbursed separately using e‑Reimbursement

UW-Madison Accounting Services will comply with the rules set forth by the UW-System, Board of Regents and federal government concerning non-salary payments as established in the following documents:

Procedure

I. General Guidelines

The Payment to Individual Report (PIR) is used to request all payments to individuals except salaries, employee reimbursements, and payment to subcontractors and architects. An individual is defined as "a person who is not a company, partnership, corporation, association, organization, trust or estate, and for whom an employer-employee relationship does not exist." See FPPP #31 for more details.

Examples of valid payments processed with a PIR:

  • Direct-charge payments to individuals for services, prizes and awards, scholarships, rents, royalties, and participant support.
  • You may use the PIR to pay a non UW employee for services.
  • You may use the PIR to pay a fee that is less than $100 to a registered UW student.
  • If you are processing scholarship payments to U.S. Residents on Program 9, please review the Automated Departmental Scholarship procedures. Contact your Dean’s Office for further information on this process as each Dean’s Office has a representative in charge of submitting scholarship payments to U.S. Residents on Program 9 using the Automated Departmental Scholarship procedures mentioned above.
  • All payments to an Individual, Sole Proprietorship, Partnership, or Limited Liability Companies (LLC) as described in the 1099-MISC/1042S Tax Reportable Transactions document.

Notes:

  1. Fee for services payments over $100.00 to students or any payment to a UW employee must be pay rolled.
  2. Lists are not allowed to be submitted with a PIR effective 02-19-2010.
  3. For non-employees who file for reimbursement of travel costs, please follow the guidelines outlined in Policy 203-Payment for Services and Travel and Expense Reimbursement for Non-employees.
  4. If a transaction is over $5,000, a requisition is required unless the department has delegated authority to do Entertainment Contracts; see Purchasing Policy and Procedure, Entertainers/Speakers/Instructors and Consultant Contacts.
  5. See UW System Financial Policy and Procedure Paper #36 for further instructions.
  6. Contact John Dreger at 333 E Campus Mall #9701 for instructions regarding the processing of student loans.

Account Codes

  • Code payments for services to SFS Account Code 2620.
  • If the coding for payment is using Program 9, the Dean/Director's Office must send the PIR to the Student Financial Aids Office for approval.
    • Program 9 can only be used with SFS Account Codes 5711 and 5713.
  • Provide the individual's home mailing address when using the following SFS Account Codes on the PIR: 2620, 2621, 3750, 3860, 2637, 5709, 5710, and 5711.
  • SFS Account Code 2637 (Reportable) should conform to our procedures for paying human subjects.
  • Tax-reportable payment account codes are posted on the Accounting Services web page at http://www.bussvc.wisc.edu/acct/tax/1099tax.pdf.

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II. Definitions of Payments That Can be Made Using a PIR

A. Scholarships/Fellowships

Student assistants are enrolled University of Wisconsin graduate students, and, on occasion, undergraduate students, who are appointed and paid directly through department channels. Payments for assistantship stipends must be pay rolled. Payments to undergraduates are generally reported on the grid form and those to graduate students are reported on a PIR. The titles authorized for student assistants are Research Assistant, Program/Project Assistant, Teaching Assistant, and Undergraduate Assistant. Additional student appointments, which also must be pay rolled., are Fellow, Scholar, Trainee, Advanced Opportunity Fellow, Special Graduate Trainee and House fellow/Resident Assistant.

Although payments for assistantship stipends must be sent through payroll, other payments to support research of research assistants or student appointments should be requested on the Payment to Individual Report. An example of this type of payment is a travel award to a research assistant.

Lump sum payments for scholarships/fellowships which are not related to student assistantships are generally requested through the Payment to Individual Report using the appropriate student aid class codes. Examples are athletic scholarships, participant payments, and departmental scholarships. For scholarship payments to U.S. Persons it is highly encouraged that the Bursar's Automated Scholarship Process by used. This process can be found at http://www.bussvc.wisc.edu/bursar/skolmenu.html and by contacting your Dean's Office. However, all scholarship payments (whether for graduate or undergraduate students) to Nonresident Aliens (NRA) must be processed on a Payment to Individual Report (PIR) due to the immigration documentation and taxation requirements.

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B. Prizes and Awards

  • Payments to employees, which are not service related, and all non-scholarship cash awards, cash prizes, and gift certificates to non-employees.
  • Prizes are generally awarded to one or more participants in a University-sponsored event for promotional purposes (from FPPP #46).
  • Non-cash prizes and awards—Note: Gift Certificates and all other non-cash prizes and awards are considered by the IRS to be the same as cash for tax-reporting purposes.
  • Please refer to 1099-MISC/1042S Tax Reportable Transactions by Account Codes for Account Code description, tax report ability, and other relevant information.

Cash prizes and awards which are in any way related to a person's employment with the University MUST be paid through the payroll system as a lump sum payment. An example of this type of payment is an award to a faculty member for excellence in teaching. The payment will be subject to tax and social security withholding and will be reported on the employe's W2 form.

Occasionally, persons who are considered University employes receive prizes and awards that are completely unrelated to their employment. For example, a student who happens to work on campus may win an essay contest sponsored by an academic department. This type of payment should be requested on the Payment to Individual Report.

Cash prizes and awards are considered taxable income and are reported to federal and state tax authorities. In contrast, scholarships and fellowships are taxable only to the extent they exceed tuition, books, and course-related supplies and equipment. Scholarships and fellowships to U.S. residents are not reported to federal and state tax authorities. It is very important that scholarships and fellowships be reported on the appropriate scholarship/fellowship account code. Scholarships and fellowships recorded on a prizes/awards class code will receive incorrect tax treatment. If you are unsure if a payment qualifies as an award or a scholarship, the determining factor should be whether the student has unrestricted access to the funds. It is most likely a scholarship if the recipient must be currently registered or registered in the future at an educational institution in order to receive the payment. It is most likely an award if the recipient is entitled to receive payment regardless of student status.

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C. Services (Refer to account Codes 26xx for Specific Account Codes)

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D. Research Subject Payments (Account Code 2637)

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E. Royalties (Account Code 3860)

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F. Rents (Refer to Account Codes 23xx for Specific Account Codes)

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III. Instructions for Completing the Payment To Individual Report Form

See also the Payment to Individual Form Tutorial.

Vendor # Each vendor or individual will be added to our SFS Accounting System Vendor File and be assigned a vendor number. For Accounting Services use only, leave blank.
Voucher # Each payment made in the SFS Accounting System will be assigned a voucher number. For Accounting Services use only, leave blank.
Payee name The full, legal name of the payee (last name, first name, middle initial).
Amount Enter the total amount to be paid to the individual before any applicable tax withholding.
Funding Information Enter the specific funding information to which the payment is to be charged. This includes Account, Fund, DeptID, Program, Class (Bldg #), Budget Year, and Project.
Taxpayer ID# (SSN, EIN, ITIN)

The Social Security Number (SSN), Employer Identification Number (EIN), or Individual Taxpayer Identification Number (ITIN).

Enter the individual's social security number or individual taxpayer identification number (ITIN), if any. This is the tax identification number under which any reportable payments will be reported to tax authorities. Accuracy is extremely important. Taxes must be withheld from reportable payments if a social security number or ITIN is not provided.

An individual who is a nonresident alien and does not have a social security number or ITIN, should apply for a social security number, if eligible, or for an ITIN, if not eligible for a social security number. After application has been made, enter "applied for" in this space, and see Accounting Services Policy and Procedure Manual on Tax Reporting and Withholding on Non-Salary Payments.

Invoice # Leading characters PIR plus the date of service, complete as PIRMMDDYY. Where there is an attached invoice, PIR plus the invoice number should be used.
Payment Handling Code Determines how the check will be routed. For Accounting Services use only, leave blank.
Mail To Address

Enter the address to which the check should be mailed or special handling instructions (i.e., call for pickup, campus mail, etc.).

  • If the check is to be picked up, enter "please call (name) at (x-xxxx) when check is ready.
Permanent Home Address Enter the individual's permanent mailing address if different from the "Mail Check To" address. This is the address to which a tax form will be mailed at the end of the calendar year.
If State Employee indicate Agency/Dept If paying an employee from another state agency or department, please agency and/or department.
Currently Enrolled UW Student Is the payee a student currently enrolled at a UW Institution? Check yes or no.
Residency

If the payee is a legal United States resident or a resident of another country, check appropriate box. If resident of another country please enter the country name and VISA type in the space provided.

1099-MISC/1042S Tax Reportable Payment

Select Yes, No, or Not Sure.

Please use the 1099-MISC/1042S Tax Reportable Transactions document to determine whether a transaction you are processing needs to be reported to the payee for tax purposes. All transactions listed in the column labeled “1099-MISC/1042S REPORTABLE TRANSACTIONS INCLUDED IN THIS CODE” must be marked/checked as reportable on the processing form you are submitting (PIR, etc.).

If you are not sure please check the appropriate box on the form and Accounting Services will make the determination. Accuracy is a must in order to be in compliance with Internal Revenue Service (IRS) reporting requirements.

Date(s) of Service

Enter the exact dates during which service was/will be provided.

Purpose of Payment

Describe the purpose of payment.

For more information, call

Indicate the name and phone number of a person to contact if there are questions regarding the payment request.

Add additional contact information from the Dean’s Office to be contacted instead of the individual listed on the DP/PIR form. Add the contact's name and phone number directly under the departmental contact person. (Hint: Use "Alt + Enter" when adding the additional information in the field. Using only the "Enter" key will result in moving to the next cell or field in the form.)

Accounts Payable will only contact the person indicated from the Dean's Office as responsible for supplying additional information; not both. If Accounts Payable receives a form without an additional Dean's Office contact name, the contact person indicated on the form will be the only one contacted.

Business Office Use Only Where taxes are calculated. For Accounting Services use only, leave blank.
Entertainer/Public Speaker Section

Complete this section if the payee is an entertainer or public speaker.

  • Attach a completed, signed entertainment contract.
    • Only UW Purchasing can sign contracts for the University unless the Department has been delegated by Purchasing to sign contracts.
  • Payment may be subject to withholding if the entertainer or public speaker is not a Wisconsin resident.
    • If the payee is an entertainer or public speaker and is a non Wisconsin-resident then a completed Department of Revenue (DOR) Form WT-11 must be attached to the PIR.
  • See Accounting Services Policy and Procedure Manual on Tax Reporting and Withholding on Non-Salary Payments for complete instructions regarding the Wisconsin Entertainer Tax.
Federal Tax Calculation For Accounting Services use only, leave blank
Scholarship/Fellowship Section If the payment is for a scholarship or fellowship to a UW student, separately enter the portions of this payment which apply to Semester 1, Semester 2, and Summer Session. Enter the award date (date the student was notified of the award.)
Approving Signatures And Dates

Before payments can be processed all signatures and dates must be on the PIR (Department Chairperson/Project Director, Dean/Director, Student Financial Aids if expense is charged to Activity 9, and Authorized Institutional Approval (Pre-Audit)).

  • If the payment is for a scholarship/fellowship on activity 9, the form will be forwarded by the Dean's office to the Office of Student Financial Aids.
Submitting the form:

Print and submit one copy of the form to Accounting Services, Suite 5301, 21 N. Park Street..

Photocopy original receipts that are not 8 ½ by 11 and attach the photocopy to the PIR instead of the original.

  • The Department keeps the original receipt as a back up for 90 days and then destroys it.
Forms Help

Red triangles in various fields of the form contain comments designed to help you complete the form. Also, some form text is hyper linked to web information that will assist you in completing the form.

Questions regarding this form should be e-mailed to uwtravel@bussvc.wisc.edu.

Printing Your Form There are many versions of Excel on campus. The forms have been developed to print on one page. If you are having problems printing, use the Excel tool bar, select File, then Page Set Up. This will open a dialog box for you to select "Fit to 1 page". If this solution does not work, please contact your IT support person for further assistance.

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IV. Policies for Compliance

Certification of Compliance

FPPP #31 requires a certification of compliance with FPPP #31 on all requests for payment. Your signature on the PIR or requisition is a certification that you have read FPPP #31 and the transaction is in compliance with the policy.

Exception to FPPP #31

Section III of FPPP #31 states "When an institution determines an employment relationship exists, the individual must be appointed and paid on payroll unless the exception under 'Employment Procedures' is met. The exception listed under 'Employment Procedures' includes payments of less than $500 for a series of definitely predicted events to persons other than current UW System employes, full-time state employes, or students attending UW System institutions."

Part-time state employes are not covered by the exception under "Employment Procedures". In making the determination whether the individual is considered a student attending a UW System institution for the purposes of this exception, a student who is eligible for student employment falls into this category. Contact Academic Personnel for current guidelines regarding eligibility for student employment.

The term "a series of definitely predicted events" is to be taken literally. The $500 payment limit applies to any series of definitely predicted events, regardless of time period or source of funding.

UW-Madison has requested and received approval to make one additional exception to the policy. If the individual performing the service is a non-U.S. resident and the work is performed outside the United States, the individual may be paid as an independent contractor, regardless of whether an employment relationship exists.

Academic Support Services Policies

Chapter 36 of the Wisconsin Statutes gives the Board of Regents the authority to enter into contracts in order to fulfill the instruction, research, and public service missions of the University. Contracts entered into under this authority do not need to follow the state purchasing statutes found in Chapter 16 of the Wisconsin Statutes. FPPP #31 permits the use of Chapter 36 authority to obtain unique services directly in support of instruction, research, or public service (referred to as Academic Support Services), without obtaining bids or waiver of bid authority.

Before deciding if a service qualifies as an Academic Support Service, it is necessary to ascertain that the person performing the service should not be pay rolled. If it is not a payroll transaction, Purchasing Services will make the final determination as to whether a service may be considered an Academic Support Service.

The requisition process must be used for all academic support service requests. A PIR cannot be used for such transactions.

FPPP #31 requires signed agreements for academic support services if the cost is $5,000 or more (excluding itemized travel). Agreements may be written at the department's option for services costing less than $5,000. Purchasing Services will generate the agreement and send it to the vendor for signature. For more information on the format of such agreements, contact Purchasing Services.

Regardless of dollar amount, Academic Support Services Agreements must be signed by an authorized contracting officer for the institution. This generally is the Director of Purchasing Services. You do not have authority to sign such agreements.

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V. W-9 (or W-8BEN for Non-Resident Aliens)

Effective January 1, 2010, UW-Madison requires that a completed and signed form W-9 (or W-8BEN for Non Resident Aliens) be attached to all tax reportable payments requested on Payment to Individual Reports (PIR) and Direct Payments (DP), but not for payments made through PO’s and ASSO.

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Related Documents

UW-Madison

UW System


Related Policy/Procedure

 


Who should know this policy?

Deans, Directors, and Staff who prepare payments.


Contacts

E-mail at uwtravel@bussvc.wisc.edu.

Policy and Procedure Index