Speaking Out

Why This Paperwork?

This note is to alert faculty to the recently implemented policy by the Corporate Tax Department of our University (without prior notification, of course) concerning payment of travel expenses to foreign visitors who receive no compensation for services rendered. In the past this only required the completion of the University Travel Expense Form which simply identified the name, address, social security number of the foreign visitor and included receipts for the dates of travel. The new rules relating to such travel expenses require not only the completion of the University Travel Form, but in addition,

a. A Foreign National Information Form
b. IRS Form 8233--Exemption Form With holding on Compensation
c. IRS Form W8--Certificate of Foreign Status
d. IRS Announcement 9612
e. Visa and INS Form I94--Arrival/Departure Record

I recently sent these forms to a visitor from France who agreed to come here for a lecture and conference and we agreed to pay for his overseas travel. He received no other compensation. He replied that since he did not understand the questions in these forms, would we permit him to hire a tax accountant at our expense to complete these forms. I believe your response as an American citizen would probably be the same. As best as I, an ignorant tax payer who also requires a tax accountant to fill out his forms, can tell these are for individuals who receive compensation for services. Except for answers to questions already supplied in the University Travel Expense Forms, the remaining do not appear to be applicable in such cases.

Clearly the implementation of such rules will seriously affect the participation of foreign visitors in Conference and Seminar programs at this institution, visitors who are at the forefront of their field and give freely of their time. It is difficult to comprehend the reason for such measures. Surely there must be a more rational means of determining whether or not an individual has received compensation for services, if that is the purpose. Surely administrators can be more creative in accommodating the needs of IRS without disrupting a legitimate and essential function of a teaching and research university. Why must the house be burned down in order to catch a tiny mouse?

-- David White
Professor of Chemistry

Response on INS/IRS Forms

While we wholeheartedly agree with you that the requirements imposed on the University by the Immigration and Naturalization Service (INS) and the Internal Revenue Service (IRS) are onerous we are nevertheless committed to abiding by them. The actions taken by this office are in direct response to an INS communication which remind colleges and universities across the nation of its intention to crack down on their making illegal payments to foreign scholars. Foreign scholars who come to this country on a B1 (business) visa may only To further complicate matters, the IRS has informed colleges and universities that reimbursements of travel expenses to foreign scholars (who are not employees) by U.S. institutions, are subject to 30% federal income tax withholding, at the source, on those reimbursements. Only those individuals from countries that have a tax treaty with the U.S. may claim exemption from the withholding requirement, by submitting a completed IRS Form 8233 (Exemption From Withholding on Compensation for Independent Personal Services of a Nonresident Alien Individual) to the University. While the form states that it is for compensation related services, the IRS' Office of Foreign Payments has informed us that this is the correct form for claiming exemption from the 30% withholding tax on travel reimbursements.

Although we are not required to withhold on individuals from tax treaty countries, we are required to report such payments and the Foreign National Information Form (FNIF) is a form we need in order to obtain the information necessary to complete IRS Form 1042S (Foreign Person's U.S. Source Income Subject to Withholding) for reporting purposes. We also require a copy of the Visa issued by INS and the I94 (Arrival/Departure Record) that is stapled inside the passport.

For those faculty who expect to invite foreign visitors to the University in the future, we suggest that you inform them of these governmental requirements and urge them to complete the forms before they arrive. Also be sure to inform foreign visitors that they should state that their purpose in the U.S. is business, not travel or tourism, when asked by INS Officials at their port of entry. Travel or tourist visa holders (B2 or WT) can not receive any payments from the University.

We intend to review our policies, procedures and practices in consultation with the Provost's Office and key school personnel, to determine what relief, if any is available within the current INS/IRS regulations and we will keep the University community informed of the results of those deliberations.

-- John F. Butler,
Tax Manager


Volume 43 Number 15
December 10, 1996

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