SEL
              BC  BATCH CONTROL PROCESS
              CS  COLLECTIONS SYSTEM
              DC  DEFERRED COMP. AUTH. FILE - BOSP & TREASURER
              DE  DATA ENTRY PROCESS
              DM  DIRECTORY MAINTENANCE MENU
              EI  EMPLOYEE INFORMATION
              MF  MISCELLANEOUS FUNCTIONS - BOSP ONLY
              RS  REPORT SCHEDULING - BOSP ONLY
              SR  SALARY REFUNDS
              TR  TAX REPORTING
              W4  W4/W5 MAINTENANCE MENU


              W4 ---ENTER SEL CODE

The W-4 Maintenance Menu will then appear. From this menu select C Inquiry of Current Records, enter social security number, type 9 under type, and press the enter key.

    SEL
    A     ADD NEW PENDING RECORDS    -  SS NUMBER REQUIRED
    C     INQUIRY OF CURRENT RECORDS -  SS NUMBER REQUIRED
    I     INQUIRY OF PENDING RECORDS -  SS NUMBER REQUIRED
    M     SUMMARY OF PENDING RECORDS -  L2L3 AND OLO REQUIRED 
    N     SUMMARY OF RECORDS BY NAME -  LAST NAME REQUIRED - BOSP ONLY
    U     UPDATE OF PENDING RECORDS  -  SS NUMBER, L2L3, AND OLO REQUIRED

    TYPE
    1     W-4 DATA
    8     EXCLUDED EMPLOYMENT DATA (INCOME CODE 15)
    9     MISCELLANEOUS TAX DATA

 NEXT:  SEL C   SS NUMBER 123 45 6789   STATUS     L2L3 ****    OLO ****      
        TYPE 9  LAST NAME                         FIRST NAME

The Miscellaneous Tax Data Screen will then appear. This screen displays the information from the Reduction or Exemption From Withholding, Form DBF-BP-5.

To view reason 3 (fellowship/scholarship) select W4 from the Payroll Main Menu and press the enter key.

             SEL
              BC  BATCH CONTROL PROCESS
              CS  COLLECTIONS SYSTEM
              DC  DEFERRED COMP. AUTH. FILE - BOSP & TREASURER
              DE  DATA ENTRY PROCESS
              DM  DIRECTORY MAINTENANCE MENU
              EI  EMPLOYEE INFORMATION
              MF  MISCELLANEOUS FUNCTIONS - BOSP ONLY
              RS  REPORT SCHEDULING - BOSP ONLY
              SR  SALARY REFUNDS
              TR  TAX REPORTING
              W4  W4/W5 MAINTENANCE MENU


              W4 ---ENTER SEL CODE

The W-4 Maintenance Menu will then appear. From this menu select C Inquiry of Current Records, enter social security number, type 8 under type, and press the enter key.

    SEL
    A     ADD NEW PENDING RECORDS    -  SS NUMBER REQUIRED
    C     INQUIRY OF CURRENT RECORDS -  SS NUMBER REQUIRED
    I     INQUIRY OF PENDING RECORDS -  SS NUMBER REQUIRED
    M     SUMMARY OF PENDING RECORDS -  L2L3 AND OLO REQUIRED 
    N     SUMMARY OF RECORDS BY NAME -  LAST NAME REQUIRED - BOSP ONLY
    U     UPDATE OF PENDING RECORDS  -  SS NUMBER, L2L3, AND OLO REQUIRED

    TYPE
    1     W-4 DATA
    8     EXCLUDED EMPLOYMENT DATA (INCOME CODE 15)
    9     MISCELLANEOUS TAX DATA

 NEXT:  SEL C   SS NUMBER 123 45 6789   STATUS     L2L3 ****    OLO ****      
        TYPE 8  LAST NAME                         FIRST NAME

The Miscellaneous Tax Data Screen will then appear displaying the record of the scholarship/fellowship recipient.

XX. SUMMARY

• A. Employees
• 1. All nonresident aliens (non U.S. citizens) employees must be identified.
• 2. The aliens must be divided into two groups: "Resident Aliens" and "Nonresident Aliens" as defined by Internal Revenue Code Sec.7701(b), or by a tax treaty.
• 3. For withholding tax purposes, treat resident aliens the same as U.S. citizens.
• 4. For withholding tax purposes, treat nonresident aliens according to the special withholding rules that apply to nonresidents. Refer to Section XVI Nonresident Alien Payment Processing Procedures.
• 5. Nonresident aliens who refuse to file a proper W-4 as required by IRS regulations shall have federal income taxes withheld at the rates pertaining to single status, zero exemptions allowed.
• 6. Some nonresident aliens are eligible for exemptions from federal income tax withholding because of tax treaties if they file IRS Form 8233 accompanied by the required statement.
• 7. The Bureau of State Payrolls reports wages paid to a nonresident alien which are exempt under a tax treaty on forms 1042-S. Any additional wages paid to a nonresident alien over and above the exempt amount are reported on form W-2.
• 8. With certain exceptions, international students and scholars who are temporarily present in the U.S. on F-1, J-1, M-1 and Q-1 visas are usually exempt from withholding of Social Security and Medicare taxes. This exemption does not apply to spouses and children on F-2, J-2, M-2, and Q-2 visas, or to nonresident aliens who have become resident aliens, or to nonresident aliens who have changed to any immigration status other than F-1, J-1, M-1, or Q-1.
• B. Scholarship, Fellowships, and Grants
• 1. All amounts paid to nonresident aliens in the form of scholarships, fellowships, grants, and financial aid must be reported to IRS on forms 1042 and 1042-S, regardless of the amount paid, and regardless of whether or not the amounts are taxable, unless the grant is from sources outside the United States, in which case the grant is neither reportable nor subject to withholding.
• 2. Payees who are temporarily present in the U.S. holding F-1, J-1, M-1, or Q-1 visas are subject to withholding at 14% of the taxable portion of the grant. These individuals are considered to be engaged in a U.S. trade or business.
• 3. Some nonresident aliens are eligible for exemptions from federal income tax withholding because of tax treaties if they file IRS Form W-8BEN.
• 4. In general, those portions of a scholarship, fellowship, or grant that are used to pay tuition, fees, books, supplies, or equipment are not taxable under Sec.117 of the Internal Revenue Code if the recipient is a candidate for a degree. Any portion of the scholarship, fellowship, or grant over and above the five items mentioned above is taxable. For nondegree candidates the entire grant is taxable.
• 5. Stipends, tuition waivers, or other financial aid paid to or on behalf of nonresident aliens which require the recipient perform services in exchange for the financial aid (such as graduate assistantships) are taxable as wages, and reportable to IRS.
• C. Nonresident Alien Independent Contractors
• 1. Amounts paid to nonresident aliens who temporarily visit the campus for the purpose of giving lectures, giving live performances, doing research, and performing other services on a short-term, contact basis, or royalties paid to nonresident aliens, are reportable on Form 1042-S, and are subject to withholding of federal income tax at the rate of 30%.
• 2. Any nonresident aliens who claims that all or part of his/her compensation for personal services is exempt from taxation under a tax treaty should file IRS form 8233. Form 8233 is valid for one calendar year. The university may rely upon IRS Form 8233 as its legal reason for not withholding on a miscellaneous payment as long as it has no reason to doubt the validity of the statements made on the form. If the university has any doubt about the application of a tax treaty benefit to any nonresident alien payee, it may ignore the Form 8233 and withhold the required amount on the payment. The payee may always file IRS Form 1040NR later and claim the tax treaty benefit for the refund.
• 3. Any nonresident alien who claims that all or part of the royalties paid to him/her are exempt from taxation because of a tax treaty should file IRS Form W-8BEN.

XXI. SUMMARY OF FORMS AND DOCUMENTS

DEPARTMENT OF BANKING AND FINANCE FORMS

Affidavit, Form DBF-Affidavit , is to be prepared by an employing agency or university to certify compliance with Treasury Regulation 301.6109(c).

Reduction or Exemption From Withholding, Form DBF-BP-5, is to be prepared by an employee or fellowship/scholarship recipient claiming an exemption from or reduced withholding. The form expires at the end of each calendar year.

Foreign National Form, is to be prepared by nonresident alien individuals and submitted with each voucher and other documentation for payments to nonresident alien independent contractors.

Form DBF-BP-53, Taxpayer Identification Number Request, is to be prepared by independent contractors and submitted to the contracting agency before the performance of the services.

Form BP-NRA-Refund, Nonresident Alien FICA Refund Request, is to be prepared by employing agency or university to request a FICA Refund for a nonresident alien
U.S. AND NATURALIZATION SERVICE FORMS AND DOCUMENTS

Employer Information Bulletin 96-08: Employee or Independent Contractor?, provides information on how to identify an independent contractor for INS purposes.

IAP-66, Certificate of Eligibility for Exchange Visitor (J-1) Status, required for nonimmigrant exchange visitors.

Form I-9, Employment Eligibility Verification, must be completed by each worker and is used by the agency to determine the worker's citizenship status, employment authorization and identification and registration numbers.

Form I-20, Certificate of Eligibility for Nonimmigrant (F-1) Student Status, is to be completed by an official of the school attended by the F-1 visa holder. The form is a certification concerning the educational program and financial support of the student.

I-94 Card, Departure Record, issued to non-immigrant aliens upon arrival in the U.S. The departure record contains the alien's name, country of citizenship, date of birth, visa type and the date through which the alien may stay. Changes in the alien's status, extensions of stay and eligibility for employment may be noted.

Form I-151, Alien Registration Card (Green Card) replaced effective March 20, 1996 with the I-551.

Form I-551, Alien Registration Receipt Card, issued by the Immigration and Naturalization Service, is the official document to identify permanent resident aliens.

Visa, an official endorsement of a passport indicating the owner has permission to enter or cross a particular country. The visa type further identifies the primary purpose of the visit and relates to a section of law. In most instances, the section of law refers to the Immigration and Nationality Act. Nonimmigrant visas have one letter and one number or one letter. Immigrant visas have either two letters and one number or one letter and two numbers, and the holders are classified as resident aliens.

INTERNAL REVENUE FORMS AND PUBLICATIONS

Form 673, Statement For Claiming Benefits Provided by Section 911, of the Internal Revenue Code, filed by employees to exclude from U.S. income tax withholding on wages earned abroad to the extent of the foreign income exclusion. If for any reason you believe the employee will not qualify for the exclusion, you should disregard the Form 673. You should also withhold on any wages earned in the U.S.

Form 8233, Exemption from Withholding on Compensation for Independent Personal Services of a Nonresident Alien Individual, is required to be completed by the nonresident alien when he or she claims the personal exemption, a treaty exemption or both. The agency or university is responsible for monitoring the tax treaty benefit eligibility period for each individual who has filed a Form 8233.

Form W-7, Application for IRS Individual Tax Identification Number, (ITIN), is for individuals not otherwise eligible to receive a social security number.

Form W-8BEN, Certificate of Foreign Status of Beneficial Owner for United States Tax Withholding, is required for nonresident individuals to tell payor that individual is not subject to certain U.S. information return reporting or backup withholding rules. The Form is also used to claim a reduced rate of, or exemption from, withholding as a resident of a foreign country with which the United States has an income tax treaty, The university is responsible for keeping all Forms W-8BEN and for monitoring the tax treaty benefit eligibility period for each student who has filed a Form W-8BEN. See the W-8BEN instructions for more details.

IRS Publication 15, Employer's Tax Guide

IRS Publication 15A, Employer's Supplemental Tax Guide

IRS Publication 515, Withholding of Tax on Non-resident Aliens and Foreign Corporations

IRS Publication 519, U.S. Tax Guide for Aliens

IRS Publication 520, Scholarships and Fellowships

IRS Publication 570, Tax Guide for Individuals With Income From U.S. Possessions

IRS Publication 597, Information on the United States--Canada Income Tax Treaty

IRS Publication 901, United States Tax Treaties

IRS Publication 1542, Per Diem Rates

IRS Publication 1915, Understanding Your IRS Individual Taxpayer Identification Number

IRS forms and publications may be ordered:

By Phone            1-800-829-3676

By Mail             IRS FORMS DISTRIBUTION CENTER
                    EASTERN AREA DISTRIBUTION CENTER
                    POST OFFICE BOX 85074
                    RICHMOND VA 23261-5074

With a Computer:http.//www.irs.ustreas.gov

SOCIAL SECURITY ADMINISTRATION

Form SS-5, Application for Social Security Card, is required to be completed and submitted to the Social Security Administration by eligible individuals. Form may be obtained from your local Social Security Office, ordered by calling 1-800-772-1213 or at http://www.ssa.gov


XXII. REFERENCE SOURCES

Internal Revenue Code

Lowell G. Hancock, Issue Specialist
Internal Revenue Service
International, Foreign Payments Division

Handbook for Employers, Booklet M-274, U.S. Immigration and Naturalization Service

Immigration Procedures Handbook, Fragomen, Austin T., Jr., Del Rey, Alfred J., Jr., and Bell, Steven C., Clark Boardman Callagan, 1997.

Immigration Law Report, U.S. Taxation of Foreign Students and Scholars, Singer, Paula N.
Vol l. 15, No. 8, April 15, 1996.

Internal Revenue Publications

Manual from Nonresident Alien Tax Compliance Immigration Workshop in Washington, D.C., September 11, 1996, written by Eleanor Pelta and Laura Fotte Reiff, immigration attorneys

Nonresident Alien Tax Compliance: A Guide for Institutions Making Payments to Foreign Students Employees, and Other International Visitors, Kepley, Donna E., and Harding, Bertrand, M., Jr., Arctic International, 1996, Washington, D.C., http://www.arcticintl.com/

Treasury Regulations

U.S. Immigration and Naturalization Service Web Site, USCIS.gov Home Page


Windstar Technologies, http://www.windstar-tech.com

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