Payments to Nonresident Aliens

Original Issuance Date: January 12, 2021

Last Revision Date: December 1, 2023

1. Policy Purpose

This policy establishes the circumstances and procedures under which a UW System Institution may compensate a nonresident alien for personal services; reimburse the individual for travel; award scholarships, fellowships, academic prizes and awards; or compensate the individual for work as a research subject.

2. Responsible UW System Officer

Associate Vice President and Chief Human Resource Officer

3. Scope

This policy applies to all UW System Institutions, including UW System Administration.

4. Background

The UW System recognizes the value of the presence of international visitors, students and scholars on its campuses. Circumstances may arise in which a UW System institution seeks to hire, compensate, reimburse or issue awards to these visitors. The IRS has strict rules regarding payments to nonresident aliens, and this policy is intended to allow UW System institutions to navigate these rules.

5. Definitions

Alien: Any person not a citizen or national of the United States as the term “alien” is defined in section 101(a)(3) of the Immigration and Nationality Act (8 U.S.C. 1101(a)(3)). This term may include a stateless person and is synonymous with “noncitizen” and “foreign national.”

Nonresident Alien: A nonresident alien is any individual who is not a U.S. citizen or U.S. national. A nonresident alien is an alien who has not passed the green card test or the substantial presence test. This can include students, tourists, business visitors, exchange program participants, representatives of foreign governments or organizations, and temporary workers, among others.

Resident Alien: Non-U.S. citizens currently residing in the United States. Individuals in falling under this definition may be further classified as a permanent resident, conditional resident, or returning resident. These individuals will typically have a “green card” or will meet the “substantial presence” test. (See IRS Publication 519.) Payments to resident aliens are processed using the same mechanisms as payments to U.S. Citizens.

Visa Type: For non-immigrants, in this policy this refers to the non-immigrant classification held by the foreign national. In many cases this will refer to the classification granted on the entry visa issued to the foreign national. If the foreign national’s non-immigrant classification changes after entry to the country, then this will refer to the most recent non-immigrant classification granted to the foreign national.

6. Policy Statement

A. Non-Discrimination in Employment

I. No UW System Institution shall discriminate on the basis of national origin or citizenship status against individuals legally eligible to work in the United States.

B. Employment

I. UW System Institutions shall only employ individuals legally authorized to work in the United States. This can include resident aliens, nonresident aliens whose visa type permits employment, or other non-immigrant visa holders whose visa type permits work upon receipt of additional authorization.

II. The specific authorizations, limitations and requirements for employment will vary depending upon the individual’s country of origin and visa type. Hiring managers should work with their Business and HR Offices, as well as their institutional International Services Office, to ensure that the proper employment parameters and requirements are met for each individual. (See Attachment 238-1.)

III. All required authorizations (including an Employment Authorization Document, if required), and a United States Taxpayer Identification Number, which can be a Social Security Number (SSN) or an Individual Taxpayer Identification Number (ITIN). (See Attachment 238-2). If an employee is authorized to work in the United States and has applied for an SSN or ITIN, institutions must follow IRS and Social Security Administration procedures for reporting income pending the receipt of the employee’s SSN or ITIN.

IV. All nonresident alien employees must maintain a Glacier individual record for payroll and tax purposes, or a comparable account with a UWSA-approved third party software program to house the individual’s personal data, including current and historical U.S. visit and immigration information, tax filing status, and tax treaty eligibility.

C. Scholarships/Fellowships

I. If payments are made in return for any service (e.g. teaching, research, administrative or clerical) then the payment is considered compensation and must be paid through payroll. Normal employment rules shall apply.

II. If the scholarship/fellowship is a “qualified scholarship” per section 117 of the Internal Revenue Code, then no withholding is required, and the payment is not considered employment for visa purposes. Payment for Qualified Scholarships must be made through the individual campus’ Bursar’s Office Student Information System as there are specific requirements and monitoring that must be done. Guidance on paying Qualified Scholarships and all payments to students are outlined in the guidelines/tool provided at Payments to Students. These guidelines/tools provide assistance to users in determining the intent of a payment made to a student and the proper payment mechanism to use to make the payment to a student. It also provides guidelines for correct payment procedures to ensure compliance with all applicable federal, state, and UW rules and regulations. Any portion of the scholarship that does not directly pay for tuition and fees is considered non-qualified, and is possibly subject to withholding and reportable on Form 1042-S. These Non-Qualified scholarship/fellowships must be paid through Payroll for all nonresident aliens.

D. Independent Contractor services/ Gifts/ Prizes/ Honorariums/ Royalties/ Research Participation Payments

I. IRS W-8Ben form must be completed before payments are made if the recipient is a nonresident alien.

II. These payments are 1042-S reportable and may be subject to withholding.

III. Individuals holding visa types that are barred from receiving income from a U.S. Source are barred from receiving payments under this section. See Visa restrictions in Appendix 1.

IV. These payments must be paid through ShopUW+ through either a Payment to Individual Report (PIR), Direct Payments (DP), or Purchase Order (PO).