Procedure: 103-Payments to Human Subjects

Procedure: 103-Payments to Human Subjects
Date: 03/25/04 (Last updated: March 3, 2009 )

Statement of Procedure:

The following are the procedures to follow when making payments to human subjects.

Payments to a Nonresident Alien (NRA): All payments to NRA’s must be processed through a Payment to Individual Report (PIR) and must include documentation as outlined in http://www.bussvc.wisc.edu/howto/acct/requiredtx.html. All other policy and procedural guidelines regarding research subject payments remain the same except for the de minimus amount section of Policy: 103-Payments to Human Subjects (http://www.bussvc.wisc.edu/acct/policy/human_subjects/humanpol.html). The de minimus amount section does not apply to payments to NRA’s because of the documentation required by the IRS for all payments to NRA’s, as noted above.

Research subject payments can be processed through Accounting Services for both employees and non-employees. UW employees can be treated the same as non employees when participating as a research subject. Research subject payments are not considered income or wages and therefore UW employees will not need to be payrolled for their services. All other policy and procedural guidelines regarding research subject payments remain the same. Please refer to the e-mail that was sent to DBR’s on 11/14/08.

For individual payments under $300 either a Payment to Individual Form (PIR) must be completed or a Cash Advance must be obtained. The Custodian (principal investigator) can make payments directly by cash or check to human subjects and is personally responsible for the amount of the advance.

Note: Per the Internal Revenue Service (IRS), gift cards are considered equivalent to cash and are therefore handled as tax reportable payments to individuals. See section below on Taxation and Identification of Payments to Human Subjects for further details regarding Gift Cards.

If using a Cash Advance

A log must be kept of all disbursements, including name, mailing address, social security number, signature of recipient, amount paid to each individual, and payment date. A sample of the log is included in the Cash Advance instructions. The original log should be attached to the Cash Advance Accounting Form when accounting for the advance. All payments $300 and over to and individual must be submitted on a PIR Form.
Any portion of the advance not accounted for must be returned to Cash Management in the form of a check payable to "University of Wisconsin-Madison" along with the accounting for the portion of the advance using the Cash Advance Accounting Form.

If using a Payment To Individual Report Form (PIR)

All payments over $300 to an individual must be submitted to Accounting Services on a Payment to Individual Form (PIR) so a check can be directly issued to the research subject. Multiple subjects may be paid on one PIR form but must have a log attached listing the name, mailing address, social security number, signature of recipient, amount paid to each individual, and payment date.

Note: Payments to Human Subjects should only be paid by the methods above. Employees should not pay these costs from personal funds and seek reimbursement.

Taxation and Identification of Payments to Human Subjects

Just as medical information must be furnished to insurance companies for claims processing, information on participants in research studies must be obtained for tax reporting.
Under Internal Revenue Service regulations, we must collect the name, signature, mailing address, amount, and social security number of individuals who receive these payments. The only exception to this policy is a de minimus payment described below.

Dean/Director’s or their designees are responsible for monitoring the dollar amounts and frequency of human subject payments to ensure tax compliance. If an exception exists, these should be noted on the PIR or Cash Advance.
For de minimus research subject payments, which are considered to be $99.00 and under per transaction and less than $300 in total for an individual subject, you are not required, but encouraged, to obtain a social security number from the subject, however the PIR or Cash Advance Accounting Form does require the name, U.S. Taxpayer Identification Number, mailing address, amount, and payment date.
Tax Reportable Payments
- Purchasing cards are not to be used to process tax reportable payments. These transactions are identified by SFS Account Codes which are listed at (http://www.bussvc.wisc.edu/acct/tax/1009tax.xls). In order to obtain and record the information necessary to satisfy the Internal Revenue Service (IRS) and other Tax Reporting requirements, the tax reportable transactions must be paid through regular payment processing methods (PIR, DP, etc.).
Gift Cards
- Purchasing cards and Purchase Orders are not to be used to purchase gift cards, in lieu of cash, for Human Subject or other service payments. Per the Internal Revenue Service (IRS), gift cards are considered equivalent to cash and are therefore handled as tax reportable payments to individuals. Follow the Cash Advance policy and procedures (301) for Temporary Cash Advances if gift cards are required. If 133 or 144 funds are used, RSP must approve the gift card purchase. An e-mail correspondence noting the approval must be attached to the Cash Advance in order for it to be processed. Please see the Cash Advance policy at http://www.bussvc.wisc.edu/acct/policy/ca/capol.html and also review the policy and procedures associated with Payments to Human Subject Studies (103) at http://www.bussvc.wisc.edu/acct/policy/human_subjects/humanpol.html.