Policy: 203-Payment for Services and Travel and Expense Reimbursement for Non-employees

Statement of Policy:

A non-employee who provides service to, or otherwise benefits the University, may be paid for their services and/or reimbursed for actual and necessary expenses incurred in connection with their duties or activities if:

  • The expenses are specifically authorized by statute or contractual agreement; or
  • It is determined by the Dean/Director that the service provided or benefit received is essential and not otherwise available to a program or function; and it is more valuable than the amount of expense to be reimbursed.

Note:  If participation is mostly to influence University decisions for the benefit of other organizations, expenses are not reimbursable.

Limits/Maximums

  • Non-employee payment/reimbursement: Each Dean/Director's Office or Administrative Unit is responsible for determining the reasonableness or maximum amount of the payment/reimbursement and may establish additional written criteria, beyond this policy, for determining expenditure eligibility.
    • Departments are encouraged to limit non-employee payment/reimbursement to the same travel spending limits and allowances applicable to UW – Madison employees.
  • Contracted service providers: Contracted service providers (i.e. speakers, consultants, entertainers, etc.) can be bound to the University’s travel limits if their agreements set such specific limitations.
  • Job applicant interview candidates: All job applicant interview candidates must comply with University policies and maximums for all transportation, meal and lodging expenses. All expenses must be documented in accordance with UW-Madison receipt requirements.

Payment Methods

Whenever possible, a UW-Madison Purchasing Travel Card should be used to pay for non-employee travel expenses, such as airfare, lodging, and registration.  For service payments and other reimbursable expenses incurred by the non-employee, see below.

I need to:

I should use:

I should use Account Code:

Is this tax reportable?

Pay a non-employee for services

Payment to Individual Report (PIR)

2620 (Services)

Yes

Pay a non-employee for services over $5,000

Requisition  (Contact Purchasing Services)

2620 (Services)

Yes

Pay a non-employee for both services and travel & expenses

Option 1:
Payment to Individual Report (PIR).  Combine service payments and travel expenses into one amount.
------------------------------------------------
Option 2:
Payment to Individual Report (PIR) for the services amount only
And
e-Reimbursement for travel amount only

 


2620 (Services)
--------------------------------

2620 (Services)

 

Automatically assigned by system

 


Yes (total amount)
---------------------

Yes

 

No

Pay a non-employee for travel & expenses

e-Reimbursement

Automatically assigned by system

No


Service Payments to Non-Employees

All non-employee tax-reportable payments (i.e. honorariums, fees for service, etc.) must  be submitted on a Payment to Individual Report (PIR) or paid with a Purchasing Card.  Tax reportable payments are described in the 1099-MISC/1042S Tax Reportable Transactions document (1099-MISC/1042S Tax Reportable Transactions).  Payments to Nonresident Aliens (NRA) must be paid through a PIR (see How To Determine Which Tax Related Documents are Required When Making Non-Payroll Payments at UW-Madison).

Tax implications for payments for (1) services only or (2) services with travel expenses are:

  • Payment for Service Fees Only: When the PIR contains only payment for services, use Account Code 2620 (Services).  This payment is tax reportable to the non-employee.  The non-employee will receive a 1099-MISC (1042-S FOR Nonresident Aliens) for the total amount of service fees paid.
  • Payment for Service Fees and Travel Expenses:

    Option 1: Combine the payment for services and the reimbursement for travel expenses on the Payment to Individual Report (PIR) and report the total amount using Account Code 2620 (Services). This payment becomes tax reportable to the non-employee who will receive a 1099-MISC (1042-S for Non-Resident Aliens) for the total amount paid. The non-employee should retain receipts for travel expenses and report these as business expenses on their personal tax returns as allowable by IRS regulations.
    Option 2: Request payment for services on the Payment to Individual Report (using Account Code 2620) and use e-Reimbursement for the travel expenses. The services on the PIR are tax reportable to the non-employee, but the travel in e-Reimbursement is not. The non-employee will receive a 1099-MISC (1042 for Non-Resident Aliens) for the service payment only. Receipts need to be collected by the UW as these expenses are not deductible by the non-employee on their personal tax return as per IRS regulations.

  • Any Payments over $5,000:  A requisition is issued for any payment over $5,000.  See Purchasing Services.

Reimbursement of Travel & Expenses to Non-Employees

If expenses are incurred by a non-employee, e-Reimbursement is used to reimburse the individual.  Accounting Services creates e-Reimbursement profiles for Non-employee travelers.  For instructions on how to obtain an e-Reimbursement Non-Employee Profile, please see How to Obtain an e-Reimbursement Profile for a Non-Employee.

Contacts:

Travelers and departmental staff should contact their respective Divisional Business Office for policy or procedural questions.

Divisional Business Offices may contact uwtravel@bussvc.wisc.edu with questions.