Policy and Procedure: 601-Tax Compliance, Reporting, and Withholding on Non-Salary Payments

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Statement of Policy and Procedure

The University of Wisconsin System will report taxable payments to the IRS, Wisconsin Department of Revenue, and the individual receiving the payment and withhold federal or state income taxes from payments as required by Federal and State laws. Also, the University of Wisconsin will require social security numbers or Individual Taxpayer Identification Numbers (ITINs) for non-resident aliens as required by Federal law.

In general, payments to an individual may be considered taxable income, subject to federal and/or state tax. The purpose of this policy is to discuss which types of non-salary income are taxable and which tax forms are used to report that income to the federal and state government and the individual.

Tax Compliance and Financial Reporting Mission, Goals, and Objectives

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Employee Payments

• All employee service payments must be processed through the Human Resources System (HRS). Employee business expenses must be processed through the E-Reimbursement system. The only exception is for payments to employee for participating in Research Subject studies which can be paid either through (1) HRS or (2) a Payment to Individual Report (PIR).

Federal and State Tax Reporting

• 1099 Reporting
• 1042S Reporting
• 1099-MISC and 1042-S Tax Reportable Payments
• 1099-MISC and 1042-S Tax Reportable Payments by Account Codes
• W-2 Reporting

Federal Tax Withholding

• U.S. Residents
  • Backup Withholding
  • Processing Procedures

• Nonresident Aliens (NRA)

  • Calculation of Amount Withheld
  • Federal Tax Withholding

• Refund

  • Refunds of Overwithholding

Forms

• Internal Revenue Service (IRS)

  • Forms
  • Using Current Versions of Forms
  • W-8BEN and 8233

• University of Wisconsin (UW)

  • Direct Payment (DP)
  • Payment to Individual Report (PIR)
  • Direct Payment/Payment to Individual Report (DP/PIR) Generator Tool
  • Payment for Services and Research Subjects

• Wisconsin Department of Revenue

  • Wisconsin Department of Revenue (DOR) Nonresident Entertainer Form WT-11 Note: applies to all Entertainers who are Nonresidents of Wisconsin whether U.S. Persons or Nonresident Aliens (NRA)

Nonresident Alien (NRA)

• I-94 Requirements
• Required Documents for Payment, including applying for U.S. Individual Taxpayer Identification Number (ITIN) (Flowchart)
• Sample Invitation Letter
• Sample NRA Documents and Completed PIR Documentation
  • Visa (U.S.)
  • I-94 (Departure Record)
  • Payment on B-1 (Business) Visa: Honorarium with Tax Treaty and TIN (SSN or ITIN)
  • Payment on B-1 (Business) Visa: Honorarium with Tax Treaty and ITIN Application
  • Payment on B-1 (Business) Visa: Honorarium with No Tax Treaty and TIN (SSN or ITIN)
  • Payment on B-1 (Business) Visa: Honorarium with No Tax Treaty and ITIN Application
  • Payment on J-1 (Student) Visa: Scholarship with Tax Treaty and TIN (SSN or ITIN)
  • Payment on J-1 (Student) Visa: Scholarship with Tax Treaty and ITIN Application
  • Payment on J-1 (Student) Visa: Scholarship with No Tax Treaty and TIN (SSN or ITIN)
  • Payment on J-1 (Student) Visa: Scholarship with No Tax Treaty and ITIN Application
• Visas
  • Fees
  • Restrictions and Tax Treaties
  • Waiver Program Countries and Documentation Requirements
• Royalties Payments (Tax Withholding and Reporting)

Non-U.S. Source Income (Payments to Non-Resident Aliens for work performed Outside the U.S.)

Payment Methods (Allowable for Tax Reportable Payments)

Payment Recipient Types

• Limited Liability Company (LLC)

Resolving Tax Issues Prior to Payment

Sales and Use Tax

• UW Policy
  • 402-Accounting for Sales Tax Collections
• Wisconsin Department of Revenue (DOR)
  • WI Tax Requirements Relating to Nonresident Entertainers (Publication 508)
  • Sales and Use Tax Information (Publication 201)
  • Sales and Use Tax Information for Colleges, Universities, and Technical Colleges (Publication 204)
  • Sales Tax Exemptions for Nonprofit Organizations (Publication 206)
  • Sales Tax Rate Chart (includes County Tax Rates

• Where is the UW Exempt?

  • States -

    To avoid paying lodging tax outside the state of Wisconsin, please see UW TravelWIse to see if the University has a tax exemption agreement with the state you are traveling to.  Use the following navigation: Before You Go > Travel Process Guidelines > Sales Tax Exemption > Obtaining Sales Tax Exemption from Other States.

  • Countries: UW is not exempt outside the U.S.
  • Note: UW is not exempt from Excise tax or other non-Sales and Use Tax

Training

• Presentation Slides

Tuition Reporting (1098-T and 1098-E)

W-9 for UW (IRS Approved Substitute W-9 for UW)

W-9 Compliance

• Requirements
• WISDM Vendor Search with W-9 Field Indicator
• Expiration of Forms W-9 and W-8BEN

Wisconsin Entertainer Tax

• Definition of Nonresident Entertainer
• Examples of Nonresident Entertainer
• Reciprocity Agreements
• Contract Price
• Procedures for Filing Surety Bond or Cash Deposit
• Entertainment Contract Process
• Tax Withholding and Reporting
• Third Party Payment Policy
• WI Tax Requirements Relating to Nonresident Entertainers (Publication 508)

Year End Tax Reporting/Responsibilities

Appendix 1 -UW-Madison Interpretation/Definition of Entertainer

Appendix 2 -Important Tax Information

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Contact

Jose A. Carus Jr.