June 30, 1999
TO: Divisional Business Representatives
FROM: Jan Richardson, Accounting Services, and Tom Fisher, Purchasing Services
SUBJECT: REVISIONS ON FEBRUARY 23, 1999 MEMO ON PROCESS FOR CONTRACTING WITH SPEAKERS, ENTERTAINERS, CONSULTANTS AND INSTRUCTORS (NON-PAYROLLED) AND GRID FOR CLARIFICATIONS PURPOSES
- The definition of a "Consultant" has been added.
- The memo now reflects the maximum dollar amounts that may be used effective 7/1/99.
- Clarification of when a PIR must be used.
- Clarification of what the "Amount Paid" is based on.
- Minor wording corrections to assist in clarifying the intent of the memo.
- Grid established for easy access in determining the method of payment and what contract type to use.
In an effort to clarify which process to use for the above transactions for payment, we are providing the following definitions and instructions for your use.
Academic Support Service: Any instructional or professional consulting service, provided by an individual or company that is unique (sole source) and is specifically related to the University's mission of education, research or public service. An Academic Support Services Agreement and/or Order (ASSA or ASSO) is issued by Purchasing.
Consultant: An individual or group who gives expert or professional advice to a University department that relates to the University's mission.
Entertainer: "An individual or group who speaks or performs at an event open to the public" as defined by the Wisconsin Department of Revenue (DOR). This includes dancers, singers, instrumentalists or persons speaking at events open to the general public, e. g., Wisconsin Union Directorate Distinguished Lecture Series, Union Concert Series, etc.
Entertainment Contract: A University document used to state the arrangements and compensation for entertainment services provided at an event open to the public. To download a copy of this Contract, refer to the following website: http://www.bussvc.wisc.edu/purch/forms.html.
Wisconsin Entertainer Tax: Tax withheld from Entertainer's compensation required by the Wisconsin Department of Revenue (DOR) .
Instructor (Non-payrolled): An individual who provides classroom instructional services to a University department that relates to the University's mission of education (see Academic Support Services above). The instructor may perform part of a credit course, or instruct a complete continuing educational course, e.g., Engineering Professional Development or Executive Education. An ASSA/ASSO is issued to the instructor by Purchasing.
Payment to Individual Report (PIR):A form used to pay any non-employee who performs a service for the University or pay scholarships or human subjects.
Speaker: An individual who speaks to a conference or symposium group not open to the general public where a registration fee is charged to the conference attendees.
Speaker Contract: A University document used to state the arrangements and compensation for services at a conference or symposium not open to the general public where a registration fee is charged to the conference attendees. To download a copy of this Contract refer to the following website: http://www.bussvc.wisc.edu/purch/forms.html.
Standard Rider: A form used when an Entertainer or Speaker presents their own contract for the University's signature. To download a copy of this Contract refer to the following website: http://www.bussvc.wisc.edu/purch/forms.html.
II. REQUISITION AND PAYMENT PROCESS:
A. Transactions $5,000 or less effective July 1, 1999 (Best Judgments): Departments may use either a PIR or requisition for these dollar level transactions. When the individual is a non-U.S. resident a PIR must be used. The transaction amount is based on the fee portion of the compensation only. See Purchasing Policy & Procedure #3 Best Judgment Purchases. A requisition should be used if the transaction requires a partial cash advance deposit or the event is several months in the future. Non U. S. residents are processed on PIRs. Departments are encouraged to have the Entertainer/Speaker sign a Contract to protect the University from any liability issues or to spell out specific arrangements between the Entertainer/Speaker and Department. All Contracts should be signed by the Entertainer/Speaker and must be sent to Purchasing Services for signature prior to the event unless specific authority has been granted by a Purchasing Services Delegation Agreement.
B. Transactions for More than $5,000 effective 7/1/99: All transactions over $5,000 require a requisition. PIRs will not be allowed unless the payee is a non-U. S. resident. The transaction amount is based on the fee portion of the compensation.
Instructors (Non-Payrolled): An Academic Support Services Order will be issued by Purchasing Services for all instructional services. If the total compensation exceeds $5,000.00 an Academic Support Services Agreement must be prepared by Purchasing Services, sent to the instructor for his/her signature prior to the order being issued. A Social Security number is required. The instructor will receive a 1099.
Speakers: All transactions must have a signed contract PRIOR to the event taking place. If the Speaker does not provide his/her own contract, Purchasing Services will provide a University Speaker Contract. If the Speaker provides his/her own contract, then he/she must sign the University Standard Rider before Purchasing will sign their contract. A Social Security number is required. The Speaker will receive a 1099.
Entertainers: All transactions must have a signed contract PRIOR to the event taking place. If the Entertainer does not provide his/her own contract, Purchasing Services will provide a University Entertainment Contract. If the Entertainer or Speaker provides his/her own contract, then he/she must sign the University Standard Rider before Purchasing will sign their contract. Departments are not authorized by law to sign contracts/riders on behalf of the University (unless specific authority has been granted by a Purchasing delegation agreement and then only within their delegation amounts).
Consultants (Non-Payrolled): An Academic Support Services Order will be issued by Purchasing Services for all consultant services. If the total compensation exceeds $5,000.00 an Academic Support Services Agreement must be prepared by Purchasing Services and sent to the instructor for his/her signature prior to the order being issued. A Social Security number is required. The instructor will receive a 1099. A sole source justification is required for all consultant transactions.
The department is responsible for obtaining the Entertainer/Speaker's signature on all documents. The department should attach the signed document to the requisition or PIRs when applicable. The department must note CHECK WITH ORDER on the requisition if a check is desired prior to the event taking place. Also, designate whether the check will be picked up by the department or should be mailed to the Entertainer. Purchasing Services will create a purchase order when the requisition is received with all necessary signed documents attached. A check will not be issued until all necessary documents are received and signed.
Contact Purchasing Services at 262-6557 for additional information regarding this procedure. To obtain a copy of the Entertainment Contract, Speaker Contract or Standard Rider forms, go to the Purchasing Services website.
III. TAX WITHHOLDING REQUIREMENTS FOR ENTERTAINERS ONLY:
A. State Tax: Wisconsin residents are automatically exempt from the 6% tax withholding. If the total cost of a non-Wisconsin resident Entertainer's compensation is more than $3,200, including fee and travel/lodging costs, Wisconsin Statutes require 6% of the total to be withheld from the payment to the Entertainer. This tax applies whether the payment is made to the Entertainer or to an agent. It also applies regardless of whether the payee is an individual, a sole proprietorship, a partnership, or a corporation. This tax cannot be avoided by distributing the payment among the Entertainer, the agent and/or another party so each party receives less than $3,200, or directly paying expenses on behalf of the Entertainer or parties.
Tax exempt non-Wisconsin resident Entertainers must file a waiver request with DOR in order to be exempt from this State tax. Without a waiver, Purchasing Services is required to withhold 6% even though, the organization is clearly tax exempt. An Entertainer may choose to file a surety bond or make a cash deposit directly with DOR. If this is done, DOR will provide the Entertainer with a copy of Form WT-11 Nonresident Entertainer's Application and Receipt for Surety Bond, Cash Deposit, or withholding by Employer (6/94) that must be attached to the contract. Wisconsin now has a reciprocity agreement with Illinois, Indiana, Kentucky, Michigan, and Minnesota. Minnesota residents should provide a copy of Form W-222 Statement of Minnesota Residency and Instructions (12/98), and residents of all other reciprocity states must provide a copy of form W-220 Nonresident Employe's Withholding Reciprocity Declaration (9/92) with the contract to claim exemption from withholding.
The Purchase Order will be released showing that a check in the amount of the 6% tax was issued to DOR and a check will be issued in the amount of the balance to the Entertainer. A Form WT-11 is completed by Accounting Services or delegated purchasing unit and sent to DOR. This form requires the Entertainer's Social Security or tax ID number. Be sure this information is included on the requisition. The Entertainer may contact DOR at 266-2606 for instructions in obtaining a waiver, filing a surety bond, or making a cash deposit or to see their website for tax forms, publications, and other information at the following website address: http://www.dor.state.wi.us/html/formpub.html.
Also available from DOR is Publication 508 Wisconsin Tax Requirements Relating to Nonresident Entertainers (8/94), which gives complete information regarding this tax, and forms W-222 and W-220.
For more detailed Wisconsin Entertainer Tax information, check the Accounting Services website at http://www.bussvc.wisc.edu/acct/policy/tax/taxent.html or call Accounting Services at 262-1305.
B. Federal Tax for Payments to Foreign Nationals: In addition to the Wisconsin Department of Revenue (DOR) requirements for Entertainer tax withholding, there are Internal Revenue Service (IRS) requirements regarding federal tax withholding if the Entertainer is a non-U.S. resident. Internal Revenue Code 1441 requires that federal tax be withheld at 30% of the fee portion of the contract, unless the Entertainer can claim exemption from withholding under an existing tax treaty. In order to claim exemption from withholding under a tax treaty, the Entertainer must submit a completed IRS Form 8233. If payment is made to a company rather than an individual, the company may claim exemption from federal withholding by filing IRS Form 4224. The Entertainer must have a Social Security number (SSN), Individual Taxpayer Identification number (ITIN), or Employer Identification number (EIN), or must apply for one before payment for services will be made.
For more information on payments to foreign nationals and a current list of treaties, see the following website: http://www.bussvc.wisc.edu/acct/tax/foreign/acimmtax.html.