ACCOUNTING & TAXES AT BALL STATE UNIVERSITY
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Transcript ACCOUNTING & TAXES AT BALL STATE UNIVERSITY
What you need to know!
Spring 2010
New
Independent Contractor
Checklist
Foreign National Payments
Unrelated Business Income Tax (UBIT)
Sales Tax
New Prize/Award Policy
Use
this form if:
Payment
to an individual/sole proprietor
Individual to work for 5 or more days
over a 12 month period.
Examples
of when checklist will not
be required (non-employee):
Performing
artists (actors, dancers,
musicians)
Speakers or Guest Lecturers
Athletic officials
Student teacher supervisors
Musical instrument tuners
Competition winners
Remember!!!
If
an individual is a current
employee, or has been an employee
of Ball State within the last 12
months, they should be paid through
Payroll.
This includes student employees.
Contact the Accounting Office if
questions on Independent Contractor
vs Employee status.
PLAN
AHEAD!!
If
long-term assignment contact
Rinker Center for International
Programs before invitation is
extended
If
short-term assignment contact
Accounting Office for procedures
1.
2.
3.
4.
Foreign national must complete
BSU Foreign National
Questionnaire.
Foreign National must provide
copies of Visa and Passport.
Accounting Office will review to
determine next step.
Accounting Office will provide
guidance on next step.
Foreign
National possesses Visa type
that does not allow income earnings
in U.S.
BSU
is unable to pay foreign national
income.
Foreign
National meets Substantial
Presence Test.
Must be paid as a Resident Alien (RA)
Must have a US ITIN
Must complete and sign W-9
No taxes withheld
Foreign
National is resident of
country with no treaty exemption
Must complete and sign W-8BEN
US federal taxes withheld at 30%
US ITIN not required, unless foreign
national filing US tax return
Foreign
National is resident of country
with a treaty exemption
Foreign National does not meet
substantial presence test
US ITIN required to claim treaty
exemption
Must complete and sign Form 8233
BSU submits 8233 to IRS; wait 10 days for
negative confirmation, then ok to pay
No taxes withheld
Department
submits Payment Request
Voucher or Foreign Cable Request to
Accounting Office (see Formfinder)
Attach
contract, agreement, and/or any
additional documentation
Attach tax forms signed by payee (W-9, W8BEN, or 8233)
NRAs
RAs
– 1042-S – sent by March 15
– 1099-Misc – sent by January 31
Foreign
National can be paid more timely . . . But,
Must
be here on appropriate Visa
We must withhold federal income tax at 30%
Foreign national can apply for US ITIN
Foreign national can claim treaty exemption
on 1040-NR
Foreign national completes and attaches IRS Form
8233
Specifically for Colleges and
Universities
Nature of exemptions
• Sales
• Purchases
• Student Organizations
•
Teaching
and Instruction
Research
Public
Service
Other University Activities undertaken in
the conduct of governmental functions
Examples:
Sale
of food by University to enrolled
student
“student” : (definition)
individual enrolled in for-credit classes
and seeking an Undergrad or Grad
degree.
Elementary or High School students
registered for a summer conference
Examples:
Sale of educational materials (excluding books,
stationery, or supplies) are exempt if sold to
students as these sales are intended to further
the educational purpose of the school.
Sales of interstate commerce
Sales to a purchaser who is entitled to an
exemption of its own (government entity, etc)
Purchaser must supply the University with a valid exemption
certificate
Examples:
Sale of books, stationary, supplies
Sale of computers, software, peripherals
Sale of food and drink at athletic, theatrical,
artistic, cultural or informational events.
Receipts from the rental of accommodations
for periods of less than 30 days (innkeepers
tax may also apply) except if a student is in a
residence hall while participating in a forcredit course.
State colleges and universities are recognized
as governmental agencies that qualify for
exemption under IC 6-2.5-5-16.
Must meet all three requirements:
1. The purchase must be invoiced directly to
BSU.
2. The purchase must be paid for via
government funds; and
3. The purchase must be for a governmental
function
State educational institutions would be
required to collect Indiana sales tax when
they furnish or sell an intrastate
telecommunication service to students,
staff, or faculty. (i.e. long distance, cell
phone, etc.)
0-94XXX accounts are used by BSU to designate
“recognized” student organizations. They
may use the University’s exemption
certificate for purchases and the University’s
Retail Merchant Certificate for sales IF:
1. Must be “recognized” by BSU, and
2. Connected with BSU and under BSU
supervision, and
3. Student Organization’s records must be
maintained by the University as an “agency”
account.
Unrelated Business Income (UBI)
And
Unrelated Business Income Tax
(UBIT)
Tax imposed on exempt organizations
to level the playing field when they
are competing with for-profit
organizations that are performing
the same activities.
Trade
or Business (and Profit Motive)
Regularly
Not
Carried On
Substantially Related
Instruction
Research
Public
Service
Activities
of volunteers
Items sold for the convenience of
students or faculty
Qualified sponsorship activities
Student participation
Sale of donated goods or low-cost items
Special circumstances
Rental
of real property
Research
Gain
and losses from the disposition of
property
Deductible
expenses per IRS that apply
to for-profit businesses
Directly
connected to trade or business
Expenses attributable solely to unrelated
business
Expenses attributable to dual use of
facilities or personnel
IRS
auditors operate under the theory
that the burden of proof rests with the
institution when claiming expenses are
“primary and proximate”
Institution needs to provide
documentation as to the reasonableness
of all expenses
Each activity must be considered on a case by
case basis. If you have any activities that
you have questions about, contact the
Controller’s Office.
New Policy /
Procedures / Forms
Effective July 1, 2010
HOORAY!!!
GIFT CARDS / GIFT
CERTIFICATES ARE
STRICTLY PROHIBITED –
Under extremely rare occasions they may be
permitted AFTER approval from the
Controller’s Office
Two Classifications of APGI:
1. Cash (ALWAYS TAXABLE)
2. Non-Cash (items are taxable unless one of
the following apply)
A. A ‘de-minimis’ fringe benefit
B. A prize or award given directly to
Foundation
C. Employee Achievement Award
A. Non-taxable ‘de minimis’: Prize or award…
1. is NOT CASH OR CASH EQUIVALENT,
2. IS of nominal value ($40)
3. IS provided infrequently
Examples: BSU logo merchandise with useful
life less than 1 year; Artist series tickets
(Emens); Cardinal Lanes bowling; and meal
tickets (on campus dining only)
C. Employee Achievement Awards (cont’d)
1). Length of Service Awards –
(includes: Retirement)
a) More than 5 years service
b) Cannot receive more than one every
5 years (unless retirement gift)
c) Retirement gifts are distributed
through Human Resources ONLY
d) No gifts will be reimbursed by the
Foundation
2). Safety Achievement Awards
If paying by CHECK or ACH Direct Deposit:
Under $40 –(may qualify ‘de minimis’)
1. Payment Request Voucher
2. APGI Form (one per person)
OR
2. Recipient List (for multiple
recipients)
Awarding department completes forms and routes
to the Accounting Office.
If paying by CHECK or ACH Direct Deposit:
Over $40 up to $100
1. Payment Request Voucher
2. IRS Form W-9 for non-BSU
persons
3. APGI Form w/BSU ID# (one per
person) OR
3. Recipient List w/BSU ID# (for
multiple recipients)
Awarding department completes forms and routes
to the Accounting Office
If paying by CHECK or ACH Direct Deposit:
Over $101 – (see next slide for nonstudent BSU employees)
1. Payment Request Voucher
2. IRS Form W-9 for non-BSU
persons
3. APGI Form w/BSU ID# (one per
person) OR
3. Recipient List w/BSU ID# (for
multiple recipients)
Awarding department completes forms and routes
to the Accounting Office
If paying by CHECK or ACH Direct Deposit:
Over $101 – For non-student BSU
employees
1. APGI Form w/BSU ID# (one per
person)
2. Must be set-up and paid through
HR/PEB as a miscellaneous
payment.
Awarding department completes forms and routes
to the Payroll Office
If paying by CASH: (research incentives usually)
To Request Cash: (set up receivable)
1. Miscellaneous Cash Advance Form
To Clear Receivable:
1. Payment Request Voucher
2. APGI Form (one per person)
OR
2. Recipient List (for multiple
recipients)
Awarding department completes forms and routes to
the Accounting Office.
If paying by TANGIBLE PROPERTY: (same $$
thresholds apply as Check or ACH Direct Dep)
1. Purchase items using DPO(s) or PO(s) or
the Computer showcase/Bookstore)
2. APGI Form (one per person) reference
DPO/PO number etc.
OR
2. Recipient List (for multiple recipients)
reference DPO/PO number etc.
Awarding department completes forms and routes
to the Accounting Office.
If paying by TANGIBLE PROPERTY: cont’d
Items
under $40 are considered ‘de minimis’
Items valued over $40 requires BSU ID# of
BSU-related recipients
Items valued over $40 requires IRS Form W-9
for non-BSU persons
Employees
– Added to W-2 and subject to all
taxes and withholdings
Student Employees – Added to W-2
Other students, donors, unaffiliated
individuals – Form 1099MISC if over $600
Non-Resident Aliens – Added to Form 1042S