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X. TAXPAYER IDENTIFICATION NUMBERS
Treasury Regulation 301.6109-1(b)(1) requires that
"Every U.S. person who makes under this title a return, statement, or other document
must furnish its own taxpayer identifying number as required by the forms and the
accompanying instructions. A U.S. person whose number must be included on a document
filed by another person must give the taxpayer identifying number so required to
the other person on request." This section also applies to the following foreign
persons:
- A foreign person that has income effectively connected with the conduct
of a U.S. trade or business at any time during the taxable year;
- A foreign person that has a U.S. office or place of business or a U.S. fiscal
or paying agent at any time during the taxable year;
- A nonresident alien treated as a resident under section 6013(g) or (h);
- Any other foreign person who, with respect to taxes imposed under this title
(including income, estate, and gift taxes), makes a return of tax, an amended
return, or a refund claim, but excluding information returns, statements, or
documents; and
- A foreign person that makes an election under Section 301.7701-3(c).
The Bureau of State payrolls is required to furnish a taxpayer identification number
on all required returns, statements, etc. If an agency or university does not know
the taxpayer identification number of an independent contractor or employee you
must request it from the individual. The request should state that the identifying
number is required to be furnished under authority of law.
When the Bureau of State Payrolls transmits the magnetic filing of IRS Forms 1042-S
we are required to include a signed affidavit stating that we have complied with
the provisions of Sec.301.6109-1(c) for individuals that we do not have a valid
taxpayer identification number. Each agency or university is responsible for providing
this statement to the Bureau of State Payrolls for individuals paid during the calender
year that they did not obtain a valid taxpayer identification number for. This statement
should be provided by January 15th for the subsequent year. If a valid taxpayer
identification number is later received the valid number should be provided to the
Bureau of State Payrolls in writing so that we may correct the 1042-S filing. For
penalties for failure to supply taxpayer identifying numbers, see sections 301.6721-through
6724 Treasury Regulation.
A. Foreign Source Payments
Payments made to nonresident aliens outside the U.S., are not taxable or reportable
(Sec.1441(a) of the Internal Revenue Code). Therefore, these individuals are not
required to obtain a taxpayer identification number. The Bureau of State Payrolls
should be contacted to obtain a identification number for these individuals to be
used for payment purposes.
B. U.S. Source Payments
Any nonresident alien whose income is effectively connected with a U.S. trade or
business must obtain, and furnish you with a social security number. An individual
may obtain a social security number by completing Form SS-5, Application for
a Social Security Card, available from Social Security Administration (SSA)
offices. Any nonresident alien that holds an INS Employment Authorization Document
(EAD) is eligible to get an SSN.
The IRS developed the Individual Taxpayer Identification Number to provide tax numbers
to nonresidents not eligible to receive social security numbers. Any resident or
nonresident alien who does not have and cannot get an SSN and who is required to
file a U.S. tax return must obtain an ITIN.
IRS individual taxpayer identification numbers take the form 000-00-0000. The first
three digits range from 900 through 999. The middle two digits may either be 78,
79, or 80.
To apply for an ITIN, Form W-7 must be filed with the IRS. The IRS has reported
that it will take approximately 30 days to receive an ITIN. However, many nonresident
aliens will have already returned to their home country when they receive their
ITIN. Therefore, we recommend that part 3 of the Form W-7 contain the mailing address
of the university or agency, care of an individual at the university.
Applicants abroad may visit any U.S. embassy or consulate where their original documents
will be examined for authenticity. They will notarize copies of the documents, for
a fee.
Foreign/alien status and identity must be proven for any nonresident alien to receive
an ITIN and U.S. residency and identity must be proven for any resident alien to
receive an ITIN. If any of the required conditions are not validated by original,
certified or notarized documentation, the ITIN cannot be issued.
IRS Publication 1915, Understanding Your IRS Individual Taxpayer Identification
Number, provides instructions on completing Form W-7. This publication also
provides a listing of IRS offices overseas that can provide assistance.
Individuals that have applied for a taxpayer identification number may be assigned
a temporary taxpayer number by the university. Each university is responsible for
maintaining a record of the individuals assigned a temporary number and notifying
the Bureau of State Payrolls when a valid taxpayer identification number is received.
The following is the ranges of temporary numbers that should be utilized by each
university:
| University |
Range of Temporary Numbers |
| University of Florida |
849-10-0000 through 849-10-9999 |
| Florida State University |
849-20-0000 through 849-20-9999 |
| Florida A & M University |
849-30-0000 through 849-30-9999 |
| University of Central Florida |
849-40-0000 through 849-40-9999 |
| University of South Florida |
849-50-0000 through 849-50-9999 |
| Florida Atlantic University |
849-60-0000 through 849-60-9999 |
| University of West Florida |
849-70-0000 through 849-70-9999 |
| Florida International University |
849-80-0000 through 849-80-9999
|
| University of North Florida |
849-90-0000 through 849-90-9999 |
| Florida Gulfcoast University |
849-95-0000 through 849-95-9999 |
XI. FEDERAL TAX REPORTING
The Bureau of State Payrolls reports on IRS Form 1042-S, Foreign Person's U.S.
Source Income Subject to Withholding, amounts for qualified and nonqualified
fellowships, independent contractor payments and compensation paid to a nonresident
alien employee under a tax treaty exemption. All other employee compensation is
reported on Form W-2. Nonresident alien individuals may receive a Form W-2 as well
as a Form 1042-S if they claim the benefits of a tax treaty, but their income exceeds
the maximum dollar limit of the treaty.
XII. FEDERAL INSURANCE CONTRIBUTIONS
ACT (FICA) EXEMPTION
A. Exemption under Internal Revenue Code Sec.3121(b)(19)
In order for an individual to be exempt from FICA tax withholding under Sec.3121(b)(19),
an individual must be:
- A nonresident alien;
- Present in the U.S. under an F-1, J-1, M-1, or Q-1 visa; and
- Performing services in accordance with the primary purpose of the visa's
issuance
These visa holders will be considered nonresident aliens regardless of the number
of days present in the U.S. for a two or five year period (depending upon if they
are a "teacher or trainee" or a "student"). When F-1, J-1, M-1 or Q-1 visaholders
stay beyond these time periods, but are still considered nonresident aliens under
a treaty with the alien's country of residence, there can be a situation where wages
are excluded by treaty from income tax withholding, but are still subject to FICA
withholding. FICA tax applies retroactively to the beginning of the calendar year
in which the residency status occurred. Time periods for which NRAs are claiming
this exemption must be monitored to ensure that FICA is properly withheld, where
appropriate.
B. Exemption under Internal Revenue Code Sec.3121(b)(10)
Payments to nonresident aliens enrolled and regularly attending classes may be exempt
from FICA under the student FICA exemption. Section 3121(b)(10) set forth the student
FICA exemption, which generally provides that a student who works for the school
at which he/she is enrolled and regularly attends classes is exempt from the FICA
tax. This exception applies to U.S. citizens and nonresident alien students.
Nonresident alien employees eligible for a FICA exemption should be coded with a
non-contributory retirement code.
C. Application of Tax Treaties to FICA Tax Withholding
With the exception of the tax treaty with the former USSR, income tax treaties apply
only to federal income tax withholding. Therefore, an exemption from FICA tax withholding
is usually only allowed under Sec.3121(b) of the Internal Revenue Code.
D. Social Security "Totalization" Agreements
The United States has bilateral Social Security agreements with 17 countries. The
agreements eliminate dual Social Security coverage and taxes and improve benefit
protection for workers who have divided their careers between the United States
and another country.
To utilize the totalization agreement as an exemption from U.S. Social Security
tax, the foreign employee must prove either he/she or a third party on his/her behalf
is continuing to pay the Social Security tax to his/her country for the income that
he/she earns while working in the U.S. Employees may establish this by providing
a "coverage certificate" from their home country Social Security authorities.
If you want to know more about international Social Security agreements, call the
Social Security Administration's Office of International Policy (OIP) at (410) 965-3548
or (410) 965-3554. You may also obtain the details about each agreement from their
World Wide Web address:
http://www.ssa.gov/international/inter_intro.html
XIII. NONRESIDENT ALIEN FICA REFUND REQUESTS
Refunds for nonresident alien employees that had
FICA contributions erroneously withheld may be requested from the Bureau of State
Payrolls. The refund request should indicate the applicable benefiting 29 digit
SAMAS account code for the employer portion, the dates that the individual was eligible
for the exemption, and the following statement signed by the employing agency/university:
"_______________________(insert the name of nonresident alien individual) qualifies
for the Internal Revenue Code Sec.3121(b)(19) exemption, by meeting all of the following
qualifications:
- They do not possess an INS Form I-151, Alien Registration Card or
an INS Form I-551, Alien Registration Receipt Card, (green card)
- They do not satisfy the "substantial presence" test
- They are present in the U.S. under an F, J, M, or Q visa, and
- They are performing services in accordance with the primary purpose of the
visa's issuance."
A copy of the I-94 or IAP 66 should be attached that demonstrates the individual's
visa status. If the refund is for a prior year, the request should also include
the following statement signed by the nonresident alien:
"Under penalty of perjury, I certify that I will not also request the refund from
the U.S. federal government for the Social Security/Medicare tax monies deducted
from my wages in the __________ (insert year(s) calendar year(s))."
XIV. PERSONAL EXEMPTION UNDER Sec.1.1441-3(e)(2)
The withholding tax rules permit the anticipated personal exemption deduction to
be taken into account in computing the tax that must be withheld on a compensation
paid to an independent contractor. Thus, the amount of pay subject to 30% withholding
may be reduced by the personal exemption amount ($2,650 for 1997). For independent
personal services, use Form 8233 to claim a tax treaty exemption and/or the personal
exemption amount.
Example. A nonresident alien individual is paid remuneration subject to withholding
under Sec.1.1441-1 for performing personal services during a stay of 100 days in
the United States, the amount of $726 will be allocated as the portion of the deduction
to be allowed against the remuneration for personal services performed within the
United States during that period; and withholding at 30 percent shall be applied
against the balance, if any, of the remuneration. If, for example, the total remuneration
paid for that period is $2,000, a total tax in the amount of $382.20 [($2,000-$726)
x 0.30] is required to be withheld under Sec.1.1441-1.
Under Proposed Treasury Regulation Sec.1.1441-4(b)(6), individuals would be allowed
to claim the full value of the personal withholding exemption, not the prorated
value.
XV. NONRESIDENT ALIENS PAID FROM LOCAL
FUNDS
Universities and agencies that pay nonresident aliens through their local funds
are responsible for withholding the required amount of tax, and reporting these
transactions to the Internal Revenue Service. The university or agency must use
their own federal identification number for this purpose.
Payments and reporting should be made in accordance with applicable sections of
the Internal Revenue Code, Treasury Regulations, and Immigration Law. Documentation
supporting these payments should be retained by the university and available to
the Department of Banking and Finance upon request for audit purposes.
XVI. WITHHOLDING PAID ON THE BEHALF
OF NONRESIDENT ALIENS
When a state agency or university does not withhold tax from payments made to or
on behalf of a nonresident alien individual the "tax on tax" problem occurs. When
an agency or university elects to pay the individual's tax liability (assuming that
they agency or university has a discretionary fund for this purpose) under U.S.
tax law, the payment constitutes additional income to that individual.
The fact that an agency/university may not be able to withhold tax from a particular
payment does not alleviate the agency's/university's responsibility to withhold
or the liability for the tax required to be withheld.
Example. If a university pays a nonresident alien independent contractor
$1,000 for giving a lecture, it must withhold 30 percent of that amount, or $300.
However, if the university has discretionary funds available and elects to pay the
IRS on the behalf of the individual, the amount must be "grossed up." The $300 withholding
would constitute additional income to the nonresident alien and is therefore subject
to additional taxation. Consequently, the university must pay additional withholding
to the IRS. This "grossed up"amount is calculated as follows:
1000 ) [1- {.30}]
= 1428.58.
Total withholding remitted to the IRS would be $428.58.
Formula: Net Amount / [1- {tax rate}] = Gross amount to be paid.
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