Transcript Independent Contractor or Casual Employee? What is the APS form and PBS document? http://www.utexas.edu/business/accounting/webhelp/pbs_info.html.

Independent Contractor
or Casual Employee?
What is the APS form and PBS document?
http://www.utexas.edu/business/accounting/webhelp/pbs_info.html
Independent Contractor or Casual
Employee?
Office of Accounting
Cynthia Roberts, CPA
Finance Manager
• Travel
• Independent Contractors
• Scholarships
Lori Monson
Senior Administrative Associate
• Independent Contractors
Class Objectives
1.
When is a PBS/APS used as an authorization
tool?
2.
Determine when the PBS is required and when
the paper APS form should be used.
3.
Identify the essential elements within a PBS or
an APS.
4.
Know when a new PBS must be created if
changes occur.
Class Objectives
5.
Learn the classification criteria used to identify
an individual as a casual employee or an
independent contractor.
6.
Learn how to use the Employee/Independent
Contractor Classification Checklist to determine
whether an individual will be paid on a VP2 or
an OV7.
7.
Practice Session – Different scenarios, different
outcomes.
PBS document / APS Form
Required for one-time, short-term, or
sporadic services provided by an individual
or unincorporated sole proprietor
(including DBA’s) for any vendor whose
VID starts with a “2” and has the SSN
embedded.
Continuing full-time appointments of two
weeks or longer should be handled using
standard HR procedures.
PBS document / APS Form
Continuing maintenance contracts or other
recurring services or services subject to bidding
requirements should be handled using standard
purchase order procedures.
Contracts should be used when the payment is
anticipated to total more than $25,000 in any one
fiscal year period, or when special terms, such as
first class travel or fee pre-payments, are required.
Consulting services should only be authorized with
a formal contract.
Consulting Services
Strict State Definition
“A study conducted for a state agency or advice
provided to a state agency under contract that does
not involve the traditional relationship of employer
and employee. The term does not include a routine
service that is necessary for the functioning of a
state agency’s programs.”
A formal contract should be prepared instead of a
PBS when authorizing consulting services.
Electronic PBS document
The required authorization document for all services procured
after June 24, 2006 when possible.
Paper form “Employee/Independent Contractor Classification
Checklist” (EICCC) is required in addition to either the
paper APS or the electronic PBS.
Approved document is printed and signed after services have
been performed, just like the APS, and sent with the EICCC to
the Office of Accounting (VP2) or Payroll Services (OV7)
based on the employee/independent contractor determination
result determined by answers on the EICCC.
Paper APS form
Allowed for services authorized after June 24, 2006
if any of the four following conditions exist:
• A Contract & Grants (26) account must be used.
• Payment will be made to a foreign visitor (nonU.S. citizen) with no SSN or US taxpayer number
(ITIN).
Paper APS form (cont.)
• Only direct billed travel expenses are authorized
and no payment will be made directly to the
traveler (Reminder: You should continue to use
a VE5/VP5 to authorize expense reimbursements
to an individual when no fee is to be paid).
• A blanket APS is needed or preferred for multiple
individuals' fee payments, direct billing
authorizations, or expense only reimbursements.
Paper APS form – Required for
Taxable Travel
Spousal/family members’ travel – Travel
reimbursements (or directly billed travel, such as
centrally billed airfare, car rentals, and hotel or
apartment charges) are authorized as a fee
payment to the individual conducting business with
the university or interviewing with the university,
not to the spouse or other family member
accompanying the university visitor.
Paper APS form – Required for
Taxable Travel
Spousal and other family members’ travel is fully
taxable, and an IRS form 1099-MISC will be issued
to the university visitor if the total of all
spousal/family members’ travel exceeds $600
during one calendar year. University employee
spousal travel is prohibited, except as authorized by
the UT System Business Procedures Memorandum
65-07-02.
Please see http://www.utsystem.edu/BPM/65.htm
for more detail on this policy.
Paper APS form – Required for
Taxable Travel
Moving expense direct billings for new hires and their family
members are authorized using the paper APS form for
centrally billed airfare, car rentals, and directly billed
apartments or other temporary lodging.
The paper APS is a substitute authorization that can be sent to
the travel agency, car rental agency, hotel, etc., as a
substitute for the offer letter. The offer letter is used to
authorize reimbursements paid directly to the individual (the
newly hired university faculty or staff member).
PBS document / APS Form
Identical information is required for either
method.
Electronic PBS has additional features:
• Specific accounts can be identified for fee,
centrally-billed airfare, other travel, etc. and
amounts can be split among accounts.
• Electronic approval via electronic routing
(similar to RTA by appointment and/or
account).
PBS document / APS Form
Electronic PBS has additional features:
• Electronic Dean/VP routing (replaces DFA
manual signature).
• Audits for prior payments during current fiscal
year period.
• Audits for current employment.
Guidelines: Period of Appointment
A separate authorization document for
each unique fiscal year is required for
either the paper APS or the electronic
PBS.
Example: If services are provided 7/1/08
to 6/30/09, two forms (first ending on
8/31/08) are required.
Guidelines: Compensation
Limited to $15,000 for services.
Travel/Business Expenses may be allowed in
addition to the $25,000 for services.
No limit for service fees paid to Non-US
Citizens performing services outside the US.
(Object code 1326 must be used).
Guidelines: Current Employee
A PBS or APS may be appropriate when the
following applies:
• Duties outside regular employment.
• Within same department for continuing
education or dissimilar services only.
• Across departmental lines, unless normal job
duties routinely cross departmental lines.
Guidelines: Current Employee
Approval of Chairman/Director of Employee’s
appointing department is required. The APS
requires a manual signature; the PBS will route for
electronic approval from the appointment account.
Compensation to full-time university employees
from federal grants or contracts requires specific
authorization in the grant or written approval by
the sponsoring agency.
Note: The paper APS is required when using 26accounts.
Guidelines: Former Employee
Former employees will always be paid through payroll if:
• They were employed during the prior 12 months or
current calendar year. State vs. Local funds.
• A continuing relationship with employer exists.
• They have been paid through Payroll during the
calendar year.
• Exceptions granted on a case-by-case basis when
services are not similar to those performed while
an employee at the university.
Procedures for Authorization of
Professional Services
 Complete APS Form or Complete PBS
Document
and
 Complete Independent
Contractor/Employee Classification
Checklist
Completing the APS or PBS
•
•
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•
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•
Name and Address
UT EID or VID
Nature of Services
Description of Services
Qualifications
Employment Status:
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•
University Employee
Other State Agency Employee
• Nepotism Statement
Completing the APS or PBS
Proposed Payment
• Lump Sum Vs. Daily Rate (Federal
projects)
• Transportation & Other Expenses
• Estimated Totals
Completing the APS or PBS
• Period of Appointment
• Account Information
• Requesting Department (on paper
form only)
• Form preparer with phone number
(on paper form only) or document
creator
Completing the APS or PBS:
Approval
Approved PRIOR to services being performed
Paper APS requires:
• Signature of the Principle Investigator on 26accounts.
• Signature of the Chairman/Director
• Signature of the Dean or DFA
Completing the APS or PBS:
Approval
Approved PRIOR to services being performed
Electronic PBS requires:
• Electronic signature from appointment account
• Electronic signature from each account signer
• Electronic signature from Dean/VP
PBS Changes
The following changes are possible by adding notes
to the PBS:
• Changes to a vendor address
• Changes to nepotism statement
• Payment amount increase of less than 10 percent
of the original authorized total amount
Signature of Contractor
After services are performed, the contractor signs
and dates at the bottom of the paper APS form or
an approved copy of the PBS doc.
The signature must be dated on or after the date
services were actually performed.
The VP2 service dates must be within the dates
authorized on the APS or PBS with a signature
dated on or after the VP2 or OV7 ending service
date.
Worker Classification
• Common Law Test
• Right to Direct or Control
• 20 Questions
• Behavioral control, financial risk,
relationship of parties
Worker Classification
• Behavioral Control
• Students
• Supervision
• Financial Risk
• Usually not an issue with the university
• Flat rate vs. hourly rate
• Relationship of parties
• Prior employment
• Exclusive relationship (sole customer)
Independent Contractor/Employee
Classification Checklist
• Who should complete the checklist?
• When should the checklist be used?
• When is a signature required in the
Terms & Conditions for Federally
Sponsored Projects box? Who signs
in this box? When should the
signature be obtained?
Completing the Checklist, Part I
Relationship with The University
Part I of the checklist should always be completed.
• Does this individual currently work for the
university as an employee?
• Has an offer of employment been extended to
this individual?
• Did this individual work as an employee of the
university during the 12 months prior to the date
of this contract?
Completing the Checklist, Part I
If the answer to any of the questions in Part
I is “Yes,” STOP! The individual is classified
as an employee.
If you answered no to all of the questions,
you must proceed to Part II.
Completing the Checklist, Part II
Complete only
• Section A or B or C
• But not more than one, based on the
nature of the services performed.
Part II: Section A, Teacher /
Lecturer / Instructor
1. Is the individual an invited guest lecturer (includes
seminar, colloquium, class, etc.)?
2. Has the individual been at the institution in this
capacity fewer than four times in the past 12 months?
If the answer to both questions is “Yes,” STOP.
Treat the individual as an independent contractor.
If the answer to either question is “No,” proceed to
Question 3.
Part II: Section A (cont.)
3.
Is the individual teaching in a course for
which students will receive credit toward a
university degree?
If the answer is “Yes,” STOP. The individual is
classified as an employee.
If the answer is “No,” proceed to Question 4.
Part II: Section A (cont.)
4. Has the individual provided the same or
similar services as an ongoing business to
other unrelated entities in the past 12
months?
5. Does the university have any control over
course materials that are used by the
individual?
If the answer to Question 4 is “Yes” and the answer to
Question 5 is “No,” treat the individual as an
independent contractor. Otherwise, treat the
individual as an employee.
Part II: Section B, Researcher
1. Will the individual perform research under the
supervision of a university professor or
employee?
If the answer to Question 1 is “Yes,” treat
the individual as an employee.
Part II: Section B (cont.)
2. Will the individual serve in an advisory or
consulting (collaborative) capacity with a
university professor or employee?
If the answer to Question 2 is “Yes,” treat
the individual as an independent contractor.
Part II: Section C, Individuals not
covered Under A or B
1. Has the individual provided the same or
similar services to other unrelated
entities or to the general public as a
trade or business during the last 12
months?
Part II: Section C (cont.)
2. Will the department provide the
individual with specific instructions
regarding performance of the required
work rather than rely on the individual’s
expertise?
Part II: Section C (cont.)
3. Can the university set the number of
hours and/or days of the week that the
individual is required to work, as
opposed to allowing the individual to set
his/her own work schedule?
If the answer to Question 2 or 3 is “Yes,”
treat the individual as an employee.
Federally Sponsored Projects
The individual providing the service to the
university is required to sign the Terms and
Conditions for Federally Sponsored Projects
attesting to his/her acceptance of the
provisions set forth in the agreement. This
signature must be obtained before the
individual begins the work described on the
APS form.
Documents Required for Payment
Casual Employee
• APS Form or approved PBS document
• Classification Checklist with employee
determination
• PSEI form
• I-9
• Payment Request Form (NRAs)
• Form 8233 & Attachment (NRAs)
• Submit to Payroll on OV7 (Main 134)
Documents Required for Payment
Independent Contractor
• APS Form or Approved PBS document
• Classification Checklist with Independent
Contractor determination
• Submit VP2 with supporting documents (signed
APS or PBS and checklist) to Independent
Contractor Desk in the Office of Accounting Main
132 (K5300)
Payments to Nonresident Aliens
Note: Payments to nonresidents will typically require
additional steps and paperwork; please check with the online
resources or the Office of Accounting before proceeding with
payments to nonresidents.
• US Sourcing Rules
• SSN/ITIN
• Visa Requirements:
• J1
• B1/B2
• WB/WT
• 30 Percent Withholding Requirement
• Tax Treaty Benefits
Summary of Class Objectives
Objective 1
When is a PBS/APS used as an
authorization tool?
• One-time, short-term or sporadic
services
• “2” VID
• No special travel (first class,
entourage) requirements
• No product/property is delivered
Summary of Class Objectives
Objective 1
When is a formal contract used as an
authorization tool?
•
Fiscal year payments exceed $25,000 or
special terms (such as first class travel
arrangements or fee prepayments) are
required
•
Consulting services (strict state definition)
are obtained
Summary of Class Objectives
Objective 1
When is a purchase order used as an authorization tool?
• Recurring services, such as maintenance
• Individual service payments are made to a “1” VID
(company)
• Product is received
• Bidding is required
When is an HR appointment necessary?
Recurring services, or a continuous service period of two
weeks or more.
Summary of Class Objectives
Objective 2
When is an electronic PBS generally required?
Whenever possible after June 24, 2006.
When is a paper APS allowed?
•
“Blanket” authorizations for an event with multiple
individuals receiving fee payments and/or travel
expenses
•
Only direct billed travel expenses are authorized.
Summary of Class Objectives
Objective 2
When is a paper APS required?
• 26 contracts & grants account is used
• Payment to foreign visitor without an SSN (3 or 4
VID)
• Taxable Travel is authorized:
•
Moving expenses or house-hunting trips for newly
hired faculty
•
Spousal/family members’ travel (e.g., recruiting
faculty or high-profile speakers).
Summary of Class Objectives
Objective 3
What are the essential elements required within a PBS
or an APS?
• Name and address
• UT EID or VID
• Nature of services/description of services
• Qualifications
• Employment status
• Authorization of additional employment for any other state
agency employee/university employee
• Nepotism statement
• Period of appointment
• Account information
Summary of Class Objectives
Objective 3
What are the essential elements required within a PBS
or an APS? (cont.)
• Amount Information
• Requesting Department (on paper form only)
• Form Preparer with phone number (on paper form only) or
document creator
and approvals
•
Electronic approvals (PBS) or manual signature
authorizations (APS)
Summary of Class Objectives
Objective 4
How do I know when a new PBS document must be
created if changes occur?
Just
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•
•
add notes for:
Address changes
Nepotism answer changes
Total payment amount won’t exceed 10 percent of the
original amount authorized on the PBS
All other changes must be authorized on a new PBS.
Summary of Class Objectives
Objective 4
How do I know when a new PBS document must be
created if changes occur? (cont.)
Add notes to the original PBS to ensure it is no longer used:
• “This document has been cancelled”
• “See replacement document” (include new PBS
document ID number)
Also add notes to the new (replacement) PBS document:
“Replaces original document” (include old PBS document
ID number)
Summary of Class Objectives
Objective 5
What are the classification criteria used to identify
an individual as a casual employee or an
independent contractor?
Behavioral Control
• How to do the work vs. stating required result
• Control of class materials
• Supervision – students, low pay rate, low qualifications
Summary of Class Objectives
Objective 5
What are the classification criteria used to identify
an individual as a casual employee or an
independent contractor? (cont.)
Financial Risk
Fixed rate or lump sum vs. hourly rate
Summary of Class Objectives
Objective 5
What are the classification criteria used to identify an
individual as a casual employee or an independent contractor?
(cont.)
Relationship between the parties
• Current, former, or future university employee
performing similar duties
• The university is the sole customer
• Work involves the university’s core mission – teaching a
course for university credit toward a degree program
Summary of Class Objectives
Objective 6
How does the Employee/Independent Contractor Classification
Checklist work to determine whether an individual will be paid on a
VP2 as an independent contractor or on an OV7 as a casual
employee?
Section I – Relationship issues
Current, past, or future employment
Section II – Relationship issues
Work involves the university’s core mission – determined by
frequency (four lectures or less) or importance (teaching a course
for university credit toward a degree program)
Summary of Class Objectives
Objective 6
How does the Employee/Independent Contractor Classification
Checklist work to determine whether an individual will be paid on a
VP2 as an independent contractor or on an OV7 as a casual
employee?
Section II – Behavioral Control issues
• The university controls the content of class materials used
• Work involves supervision—the researcher is under a university
professor’s supervision or acting as a collaborator
• The university is the sole customer, provides training, or
determines the exact work schedule
Class Objectives
1.
When is a PBS/APS used as an authorization
tool?
2.
Determine when the PBS is required and when
the APS is allowed or required
3.
Identify the essential elements required within
a PBS or an APS
4.
Know when a new PBS must be created if
changes occur.
Class Objectives
5.
Learn the classification criteria used to identify
an individual as a a casual employee or an
independent contractor
6.
See how the Employee/Independent Contractor
Classification Checklist works to determine
whether an individual will be paid on a VP2 or
an OV7
Thank you for viewing this presentation
Call or email anytime with questions. We are
always happy to assist you!
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•
•
•
Cynthia Roberts, 512-475-7144
Lori Monson, [email protected]
User Services Helpline: 512-471-8802
AskUS: https://austin-utexas.custhelp.com
Thank you for viewing this presentation.
For more information, contact:
User Services
Financial Information Systems
512-471-8802
[email protected]
For more information, contact:
User Services
Financial Information Systems
512-471-8802
[email protected]