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Non-Employee Payments (Affiliates and-or Visitors)

Title:

Non-Employee Payments (Affiliates and/or Visitors)

Publication date:

7/2/2012

Effective date:

7/1/2012

BRIEF

Policy Summary

This policy provides guidance for payments made by Berkeley Lab to non-employees (affiliates and/or visitors), in accordance with U.S. Department of Energy (DOE) Contract No. DE-AC02-05CH11231 (Contract 31) and all other applicable regulations. This replaces the policies for Honoraria Payments and Stipends for Non-Employees.

Who Should Read This Policy

This policy applies to Laboratory employees involved with processing fellowships for affiliates and/or visitors

To Read the Full Policy, Go To:

The POLICY tab on this wiki page

Contact Information

Disbursements and Project Costing Manager, OCFO

Title:

Non-Employee Payments (Affiliates and/or Visitors)

Publication date:

7/2/2012

Effective date:

7/1/2012

D. Policy Statement

D.1 Overview
D.2 Payment Types
D.3 Recipient Types
D.4 Determination of Payment Mechanism Flowchart
D.5 Payment Determination Table
D.6 Invitation Letters
D.7 Tax Implications

POLICY

A. Purpose

This policy provides guidance for payments made by the Lawrence Berkeley National Laboratory (Berkeley Lab) to nonemployees (affiliates and/or visitors), in accordance with U.S. Department of Energy (DOE) Contract No. DE-AC02-05CH11231 (Contract 31) and all other applicable regulations. This replaces the policies for Honoraria Payments and Stipends for Non-Employees.

B. Persons Affected

Any Berkeley Lab employee involved with processing fellowships for affiliates and/or visitors

C. Exceptions

None

D. Policy Statement

D.1 Overview

Prior to making a payment to a non-employee through the Request for Issuance of Check (RFIC) process, the division must define the activities the non-employee will be involved in and, as appropriate, work with Berkeley Lab resources to determine if another payment mechanism is more appropriate.

  • A worker classification review assists the divisions in determining if the individual is performing services most appropriate for an employee relationship. Human Resources will serve as the primary point of contact and subject matter expert for worker classification reviews (see Worker Classification Guide).
  • If a fee for services is negotiated or prescribed, it does not qualify for an honorarium or fellowship payment. Under these circumstances, Procurement should be contacted for guidance on establishing a procurement agreement.

Reimbursements for lodging, meals and incidental expenses are processed through Berkeley Lab's TRavel and EXpense (TREX) System and are subject to the requirements in the Berkeley Lab Travel policy.

For Center for Science and Engineering Education (CSEE) Program participants at Berkeley Lab, see Education Outreach (CSEE).

D.2 Payment Types

There are two types of payments that can be made to non-employees:

  1. Honorarium Payment. A token payment in recognition of a one-time event for a voluntary, short-term service (usually 1--2 days) on which custom or propriety forbids a price or fee to be set. Examples include lectures, sharing of technical knowledge or expertise, participation in a workshop or serving on a panel discussion. Honorarium payments are not to be made in lieu of reimbursement of expenses or travel.
    1. Note: Payments to UC employees require special handling and are subject to home campus approval. Submit a Request for Issuance of Check (RFIC) for Payments to Nonemployees Form to the Controller's Office.
  2. Fellowship Payment
    1. Student Fellowship. Awarded by Berkeley Lab to support an individual's independent research or studies. The award can cover the following non-qualified fellowship expenses: room and board, travel, research, clerical help or equipment. Students must remain enrolled and under the general direction of an advisor at their home educational institution. A student fellowship is not to be paid in lieu of a salary for past, present or future research or other services. Student fellowships are subject to annual renewal (resubmission of the RFIC).
    2. LBNL Fellowship Program. Documented fellowship program endorsed by division management and approved by the LBNL Worker Classification/Payment Review (WCPR) Council. (The WCPR consists of subject matter experts from HR, the Controller's Office, Procurement and Legal and serves as a resource to Berkeley Lab divisions. The council addresses issues of worker classification as it relates to scientific collaborations.) This fellowship program is not to be paid in lieu of a salary for past, present or future research or other services to LBNL. LBNL fellowships are subject to annual renewal (resubmission of the RFIC).
    3. National Institutes of Health (NIH)/National Research Service Awards (NRSA) Fellowship – Awarded from NIH. As it relates to recurring payments each month, the Controller's Office will issue a Monthly Recurring Payment Report by the 5th of the month. Divisions need to respond via email with any exceptions by the 10th of the month to nonemployeepayments@lbl.gov. Recurring payments will be processed for payment on the 15th of each month.

D.3 Recipient Types

The following types of recipients may receive an honorarium or fellowship, subject to the restrictions of their visa classification (if applicable):

  • U.S. citizens, Lawful Permanent Residents (LPRs), or Resident Aliens (RAs)
  • Nonresident aliens

International persons (resident or nonresident aliens) may receive one of the payment types above, subject to the restrictions of their visa classification. Information on inviting a foreign national to Berkeley Lab, including eligibility and processing requirements, is available on the Berkeley Lab Affiliate Processing Web site, or the International Researchers & Scholars Office (IRSO).

D.4 Determination of Payment Mechanism Flowchart

To request review by the Worker Classification/Payment Review Council, contact the Berkeley Lab Controller.

D.5 Payment Determination Table

*Approval limits meet requirements of UC Accounting Manual, Chapter D-371-35, III.C, Allowable Rates
**Or designee (in writing)

D.6 Invitation Letters

Invitation letters must contain the following elements:

Do not make any reference in the letter to employment (e.g., salary, wages, compensation), as honoraria and fellowship payments are not part of an employee/employer relationship.

D.7 Tax Implications

  1. Honorariums
    1. Honorarium payments for short-term services performed in the U.S. are considered income and may be taxable and/or subject to withholding in accordance with Internal Revenue Service (IRS) and California's Franchise Tax Board (FTB) regulations.
    2. U.S. Citizens, LPRs, or RAs. U.S. citizens, LPRs, and RAs may receive an IRS Form 1099-MISC. California nonresidents may receive an FTB Form 592-B, by Berkeley Lab as applicable. Recipients will use these forms in preparation of their federal and California state tax returns.
  2. Nonresident Aliens
    1. Nonresident aliens will receive an IRS Form 1042-S to use in preparation of their federal tax return.
    2. California nonresidents may also receive an FTB Form 592-B, as applicable, to use in preparation of their California state tax return.
  3. Fellowship Payments
    1. U.S. Citizens, Lawful Permanent Residents (LPRs), or Resident Aliens (RAs)
      1. Fellowships for U.S. citizens, LPRs or RAs are considered taxable income by the IRS, but are not reportable or subject to withholding by Berkeley Lab.
      2. For California residents, Berkeley Lab will not report to the FTB.
      3. For California nonresidents who are students, the Berkeley Lab currently does not report to FTB due to an exception granted to the University of California by the FTB.
    2. Nonresident Aliens. Fellowships for nonresident aliens are considered taxable income by the IRS. Berkeley Lab will report and withhold, as applicable, and will issue an IRS Form 1042-S.
      1. For California nonresidents who are students, the Laboratory currently does not report to FTB due to an exception granted to the University of California by the FTB.
      2. Personal travel for nonresident alien fellowship recipients reimbursed or paid by Berkeley Lab (i.e., travel to the Laboratory, return trip home and any personal trips in between) is taxable and reportable to the IRS and FTB, as applicable.
  4. Additional Information Regarding International Persons
    1. Individuals from countries with which the U.S. has a tax treaty may be eligible to exclude some or all of their income under the terms of an income tax treaty. California does not recognize tax treaties, so California withholding will apply.
    2. The division must provide the recipient's email address on the Request for Issuance of Check (RFIC) for Payments to Nonemployees Form to enable the Nonemployee Desk to work directly with the international person to obtain required tax documentation prior to Berkeley Lab issuing the payment.
    3. The Laboratory utilizes GLACIER, a secure, Web-based tax compliance system that international persons use to provide their immigrant and tax data via the internet. This system is available to users 24 hours per day. GLACIER assists in determining tax residency, withholding rates and income tax treaty eligibility.

E. Roles and Responsibilities

Role

Responsibility

Hosting Division

Controller's Office

  • Provides oversight of Laboratory policy requirements
  • Responsible for processing nonemployee payments
  • Works with the nonemployee to ensure questions are answered and documentation is completed and received (For international persons, verifies tax treaty exemption status)
  • Issues Monthly Recurring Payment Report to divisions by the fifth of each month
  • Prepares and issues IRS Form 1042-S, as appropriate, for nonresident aliens.
  • Prepares and issues FTB Form 592-B, as appropriate, for California nonresidents
  • Issues IRS Form 1099-MISC, as appropriate, for U.S. citizens, lawful permanent residents, and resident aliens

F. Definitions/Acronyms

Term

Definition

Affiliates

Non-Laboratory employees engaged in on-site Laboratory activities. Affiliates are subject to training in safety and other subjects. They are also issued a Berkeley Lab identification badge. Affiliates may receive system accounts, research access to facilities, and a per diem allowance for housing and living expenses. Examples: Facility users, scientific collaborators, and students.

California Nonresident

In general, under the California Personal Income Tax regulations, an individual who spends more than nine months of the tax year in California is presumed to be a resident of the State. Refer to FTB Publication 1031, Guidelines for Determining Resident Status, for additional information on making a determination of residency status.

Fellowship

A payment to aid in the pursuit of the individual's independent research or studies

GLACIER

A secure, Web-based tax compliance system used by international persons to provide their immigrant and tax data via the Internet

Internal Revenue Service (IRS)

Responsible for administering United States personal income and corporation tax laws

International Person

An individual who is a citizen of any country other than the United States

Lawful Permanent Resident (LPR)

An individual who possesses an Alien Registration Receipt Card (green card), which is provided to those who become legal permanent residents of the United States

Nonresident Alien

An individual who is not a citizen, lawful permanent resident or resident alien of the United States

Resident Alien (RA)

An individual who is not a citizen or national of the U.S., but meets either the green card test or the "substantial presence test" for income tax purposes for a particular calendar year

Student

An individual pursuing a degree at an eligible education institution

Tax Treaty

An agreement between two countries specifying what items of income will be taxed by the authorities of the country where the income is earned

U.S. Citizen

Citizenship granted at birth to individuals born in the U.S., persons born abroad with at least one U.S. citizen parent, individuals granted lawful permanent residence, or individuals who have been naturalized

G. Recordkeeping Requirements

None

H. Implementing Documents

Document number

Title

Type

IRS Form W-8BEN

IRS Form W-8BEN - Certificate of Foreign Status of Beneficial Owner for United States Tax Withholding (Individual)

Form

FTB Form 592-B

FTB Form 592-B - Resident and Nonresident Withholding Tax Statement

Form

IRS Form 1042-S

IRS Form 1042-S - Foreign Person's U.S. Source Income Subject to Withholding

Form

IRS Form 1099-MISC

IRS Form 1099-MISC - Miscellaneous Income

Form

IRS Form 8233

IRS Form 8233 - Exemption From Withholding on Compensation for Independent (and Certain Dependent) Personal Services of a Nonresident Alien Individual

Form

IRS Form W-9

IRS Form W-9 - Request for Taxpayer Identification Number and Certification

Form

IRS Publication 519

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

Manual

IRS Publication 901

IRS Publication 901 - U.S. Tax Treaties

Manual

IRS Publication 970

IRS Publication 970 - Tax Benefits for Education

Manual

11.05.005.001

Request for Issuance of Check (RFIC) for Payments to Nonemployees Form

Form

11.05.005.002

Attachment A (Invitation Letter Instructions/Templates)

Template

11.05.005.003

Worker/Affiliate Classification Guide

Guideline

I. Contact Information

Disbursements and Project Costing Manager, OCFO

J. Revision History

Date

Revision

By whom

Revision Description

Section(s) affected

Change Type

07/01/12

0

M. Mock

Re-write for wiki

All

Major

DOCUMENT INFORMATION

Title:

Non-Employee Payments (Affiliates and/or Visitors)

Document number

11.05.005.000

Revision number

0

Publication date:

7/2/2012

Effective date:

7/1/2012

Next review date:

7/1/2014

Policy Area:

Payroll, Accounting

RPM Section (home)

Financial Management

RPM Section (cross-reference)

none

Functional Division

OCFO

Prior reference information (optional)

 

Source Requirements Documents

Implementing Documents

Document number

Title

Type

IRS Form W-8BEN

IRS Form W-8BEN - Certificate of Foreign Status of Beneficial Owner for United States Tax Withholding (Individual)

Form

FTB Form 592-B

FTB Form 592-B - Resident and Nonresident Withholding Tax Statement

Form

IRS Form 1042-S

IRS Form 1042-S - Foreign Person's U.S. Source Income Subject to Withholding

Form

IRS Form 1099-MISC

IRS Form 1099-MISC - Miscellaneous Income

Form

IRS Form 8233

IRS Form 8233 - Exemption From Withholding on Compensation for Independent (and Certain Dependent) Personal Services of a Nonresident Alien Individual

Form

IRS Form W-9

IRS Form W-9 - Request for Taxpayer Identification Number and Certification

Form

IRS Publication 519

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

Manual

IRS Publication 901

IRS Publication 901 - U.S. Tax Treaties

Manual

IRS Publication 970

IRS Publication 970 - Tax Benefits for Education

Manual

11.05.005.001

Request for Issuance of Check (RFIC) for Payments to Nonemployees Form

Form

11.05.005.002

Attachment A (Invitation Letter Instructions/Templates)

Template

11.05.005.003

Worker/Affiliate Classification Guide

Guideline

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