TAX FAQ'S FOR DEPARTMENTS - NON-STUDENTS

Q: People from other countries don't have to pay taxes in the U.S., do they?

A: Yes, in many cases they do if they have income from a U.S. source like Mason. Even if they ultimately have no tax liability, Mason is required to report most payments for U.S. income to the IRS as income, as well as to withhold federal taxes and issue income statements to the payees. With few exceptions, foreign visitors earning U.S. income are required to file U.S. tax returns as well.

Q: Our department just hired a nonimmigrant. What do we need to do?

A: Have the employee complete Section 1 of Form I-9 no later than their first day of work. Please ask the person to come to OIPS within three days of their first day of work to finish the I-9. They must bring original documentation that proves their identity and employment eligibility. Copies are not acceptable. If they are eligible to work for Mason, they will be given a photocopy of the completed I-9 to bring back to the department. They will also be given an OIPS tax packet and asked to make an appointment to meet with the International Tax Coordinator. Do not initiate an electronic approval until you receive the I-9 copy that has OIPS's pre-printed information in Section 2. From there, proceed as you normally would for any employee in the same position, but keep in mind that the person should not be promised employment beyond the date specified in the upper right corner of the I-9, "An employee authorized to work until xxxx".

Q: Our new employee brought us a copy of their I-9 but there's no Social Security number on it! Is that okay?

A: Many nonimmigrants are in this situation because they are new to the U.S. It may take as long as one to three months for an SSN to be assigned. Lack of an SSN does not mean someone cannot work or be paid. If the I-9 has been done at OIPS, there is no problem. Attached to the I-9 should be a Banner printout of a temporary SSN starting with "999" assigned by OIPS. Use that number to get the employee into Banner. HR will update the record with the SSN once it has been received.

Q: All I have is a copy of the I-9 done at OIPS for one of my new hires. Can I initiate an electronic approval for her now, or do I need to wait for copies of tax forms from OIPS as well?

A: Please go ahead and initiate the EA with just the I-9 copy. Especially at the beginning of the semester, it can take a while for someone to get a tax appointment, and we do not want that to delay their paycheck. At the end of their tax appointment, we'll give the employee copies of the tax forms to bring you.

Q: Do I have to do something different with check requests/travel reimbursement requests for internationals?

A: Yes! Once you have verified with OIPS that it is okay to make a payment and the person has met with OIPS and completed the necessary forms, please send the request form and supporting documents directly to the International Tax Coordinator at MSN 4C3. Please do NOT send it to Accounts Payable. This is absolutely crucial to our institutional tax withholding and reporting compliance efforts.

Q: I have a Foundation account that I want to use to pay an honorarium that OIPS has said is okay. The person has met with the Tax Coordinator. What do I do now?

A: The Foundation is not set up to do tax reporting or withholding on payments to foreign nationals. You need to contact the Foundation and arrange to have those funds moved to a Mason account, and then complete a Mason check request instead. As with all payments to foreign nationals, the completed request must be sent to the International Tax Coordinator at MSN 4C3 for review and approval.

Q: Can someone in the U.S. in business (B-1/VWB) or tourist (B-2/VWT) status provide services for Mason and be paid an honorarium (compensation)?

A: Under limited circumstances, someone coming to Mason in B-1 or B-2 status (or VWB or VWT if from a visa waiver country) to conduct "usual academic activities" like giving a one-day lecture or conducting collaborative research can receive compensation. But their activity at Mason cannot exceed 9 days, and they cannot have received similar payments from more than 5 other U.S. institutions in the prior 6-month period. The individual must meet with the International tax Coordinator and complete a tax packet. Please see section Inviting a B-1 Visitor to GMU for details.

Q: I just want to reimburse a foreign national for travel expenses. Does OIPS need to be involved?

A: Yes! Even a reimbursement may be subject to U.S. tax withholding and reporting (it depends on the person's relationship to Mason), and not everyone is eligible for reimbursements from an immigration standpoint. Please see section Inviting a B-1 Visitor to GMU for details.

Q: A professor in my department wants to invite someone who is on a diplomatic visa to Mason to give a lecture, and pay them an honorarium. Is that okay?

A: No. Diplomats are only allowed to provide services that are part of their diplomatic mission and for which they are already compensated by their own government.

Q: How about inviting a nonimmigrant professor from another U.S. university for the same purpose?

A: It depends. We can never pay an honorarium to another institution's H-1B visa holder (unless they are concurrently sponsored for H-1B status by Mason) because that status is employer-specific. If it is a J-1 non-student, it may be possible, but there are very specific steps that must be followed, and written approval must be granted IN ADVANCE of the activity by the host institution program's J-1 "Responsible Officer" or "Alternate Responsible Officer". Please, make an appointment with the J-1 Coordinator in OIPS for further information. If approved, the individual must meet with the International tax Coordinator and complete a tax packet.

Q: Can we hire another university's F-1 student to work at Mason?

A: Generally, no. F-1 students can only work for their home institution except in very limited cases. One exception would be if the student is on Optional Practical Training (OPT) and the work was in their field of study. Students on OPT must have an Employment Authorization Card that specifies some variation of "Student Practical Training" on it. Another case would be if they are on Curricular Practical Training (CPT), with Mason specified as the employer on the back page of their I-20. In either case, they need to come to OIPS to complete an I-9 and tax forms the same as any other international employee.

Q: We have an international visitor coming to campus this weekend to give a lecture and I forgot to check with OIPS to see if we can pay them anything. What should I do?

A: Don't promise them payment. Make photocopies of: their passport biodata page; any U.S. immigration stamps in their passport (always in red ink); any U.S. visas in their passport (stiff paper glued to one of the pages); their I-94 card (3-1/2" by 5" white or green card, usually stapled in the passport); any employment authorization card they may have; and their DS-2019 (if they are in J-1 status) or I-20 (if they are in F-1 status). Get a good email address and mailing address for them. Contact the International Tax Coordinator the first possible business day to see what can be done on a follow-up basis.

Q: I submitted a check request to OIPS for a $1,000 lecture honorarium, but the payee told me he only received a check for $700. What happened?

A: The statutory federal withholding rate for payments to most nonresident aliens is 30%. If we withheld $300, it means there was no applicable treaty exemption or reduced withholding provision available based on the information the person provided us. Your budget will still be charged the full $1,000. The other $300 was sent to the IRS as a withholding credit.

Q: My department hosts a summer institute and invites college students from all over to participate. Some are internationals at other U.S. schools and others are coming from overseas. We want to give them some money to help defray their travel expenses. Can we do that?

A: Assuming that the payment is not in return for services, yes. However, they will need to meet with the International Tax Coordinator and complete some forms. Please contact the Tax Coordinator well in advance of the event to make arrangements for this.

Q: Can't we avoid all these rules if we just pay a U.S. person and have them give the money to the foreign visitor?

A: No. The IRS caught on to this long ago. Even if a payment is made to a U.S. person, the law says that if the ultimate payee is a foreign national, it must be treated as if the payment was made directly to the foreign national. Circumventing the law puts the university at risk for both legal and financial penalties. We need to make payment directly to the visitor through established processes.

Q: Is there a basic information sheet on payments to internationals?

A: Please see section Hiring Internationals and section Inviting a B-1 Visitor to GMU for details.

Q: What do you do with all this stuff?

A: First we decide if the person's immigration status allows them to receive any type of payment. If they can, and are receiving an honorarium, they complete an immigration history at OIPS that allows us to determine their tax residency (nonresident or resident alien) and eligibility for tax treaty benefits or reduced (from 30%) tax withholding. We also provide guidance on U.S. tax return filing requirements during the OIPS interview, and in some cases can help people who have no SSN apply for an IRS tax payer identification number. The individual's information is entered into a tax software program to facilitate the tax residency and treaty eligibility decisions, generate necessary forms and income statements, etc. All documentation goes into a tax file so we can justify our handling of the payments in case we are audited by the IRS.

If the payment is reportable to the IRS, an income statement is issued at tax time. If there is withholding required, we remit the appropriate amount to the IRS.

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