ACCOUNTING & TAXES AT BALL STATE UNIVERSITY
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Transcript of 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
proprietorIndividual 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 LecturersAthletic officialsStudent teacher supervisorsMusical instrument tunersCompetition 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. Foreign national must complete BSU Foreign National Questionnaire.
2. Foreign National must provide copies of Visa and Passport.
3. Accounting Office will review to determine next step.
4. 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 documentationAttach tax forms signed by payee (W-
9, W-8BEN, or 8233)
NRAs – 1042-S – sent by March 15
RAs – 1099-Misc – sent by January 31
Foreign National can be paid more timely . . . But,
Must be here on appropriate VisaWe must withhold federal income tax at
30%Foreign national can apply for US ITINForeign 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 for-credit 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; and3.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, and2. Connected with BSU and under BSU supervision, and3. 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 Carried On
Not 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 businessExpenses attributable solely to
unrelated businessExpenses 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 benefitB. A prize or award given directly
to FoundationC. 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 serviceb) 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 Foundation2). 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 non- student BSU employees)
1. Payment Request Voucher2. IRS Form W-9 for non-BSU persons3. 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 Voucher2. 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