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University at Buffalo Foundation, Inc.

P.O. Box 900
Buffalo, NY 14226-0900
Phone: (716) 645-3013
Fax: (716) 645-3475
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Foreign Individuals Performing Services as an Independent Contractor

Various requests are submitted to provide payments for service or expense reimbursements to guest lecturers and other visitors/students who are in the U.S. under a visa.

The Internal Revenue Service continues to impose more restrictive regulations relative to payments to non-citizen independent contractors. The following information is required in order to process a payment to a foreign individual for:

A. Independent Personal Services (Independent Contractor/Honoraria)

1. VISA or I-94 Form

Every individual will have either a visa or I-94 Form. These forms determine if the independent contractor is entitled to reimbursement for services and/or expenses. In order to be reimbursed the individual should have the following:

  • B-1 or Combined B-1/B-2 Visa - This is a visitor for business visa and allows a payment which takes the form of a subsistence allowance for performance of temporary services, reimbursement of travel expenses, meals and accommodations or a payment for services that does not exceed travel and living costs.
  • WB Visa Class noted on Form I-94 - The U.S. government has implemented a Visa Waiver Program with various foreign countries. Under this program, an alien individual normally classified as a B-1 or B-2 visitor is admitted without a visa provided that criteria outlined under the visa waiver program are met. The immigration office will stamp the I-94 form using one of two codes. A WB, or waiver for business code allows the same reimbursement as a B-1 visa noted above.
  • TN Visa Class noted on Form I-94 - Under the North American Free Trade Agreement (NAFTA), nonresident aliens from Canada or Mexico can claim NAFTA status. Certain Canadian or Mexican business professionals are allowed temporary entry into the U.S. to participate in activities that require the individual have a baccalaureate degree or other appropriate credentials which indicate professional activities. These activities must be a prearranged activity for a U.S. business. It does not allow the individual to establish a business practice in the U.S. The individual will present this information to the immigration officer at the time of entry and the I-94 will be stamped with a TN. A TN status allows an individual to be paid as an Independent Contractor but not an Honoraria payment.
  • Mexican Border Crossing Card (Form I-186 or I-586) which allows the same reimbursements as a B-1 visa holder.

This information should be documented by completing the Determination of Residence Status for Federal Tax Withholding form and when the payment represents an Honoraria, the Request For Alien Information and Certification of Eligibility for Payment of Honoraria form (these forms should be completed by the individual to be paid) and should be submitted with a copy of the appropriate visa or I-94 page attached.

2. After identifying that the visa status will allow for payment to be made, the following forms are needed:

a. If there is a TAX TREATY between the U.S. and the individual's country:

  • Form W-8 BEN and the Determination of Residence Status for Federal Tax Withholding form which identifies the individual as a nonresident alien who is not subject to certain U.S. information return reporting or backup withholding.
  • Form 8233 (instructions) which determines the income tax status of the individual. This form is to be completed by the individual. It gives them the opportunity to avoid or minimize withholding under the provisions of the applicable tax treaty. The form should then be signed by an authorized account signatory in the spot provided for Withholding Agent Certification. Once complete, the form should be submitted to the UBF offices where it will be filed with the IRS. Once submitted to the IRS, UBF must wait a minimum of TEN BUSINESS DAYS before payment can be made. All questions must be completed, so N/A or a similar response should be entered if the question does not apply. Any applicable taxes will be withheld at the rate specified by the treaty.
    NOTE: Information on the Tax Treaties can be obtained from IRS Publication 901, U.S. Tax Treaties.

b. If there is NO TAX TREATY between the U.S. and the individual's country:

  • Form W-8 and the attached Determination of Residence Status for Federal Tax Withholding form which identifies the individual as a nonresident alien who is not subject to certain U.S. information return reporting or backup withholding. When there is no tax treaty in place, UBF must withhold 30% of the payment and remit it to the IRS. This withholding applies to both payment for services as well as travel related expenses. The individual may be able to receive a refund of this amount from the government at the end of the year.

3. In 1996, the IRS issued final regulations which required that resident and nonresident alien individuals obtain an individual taxpayer identification number (ITIN). IRS Form W-7 is available to apply for this number. This number will also be required on Form 8233 when it is submitted to the IRS. Hence, this ITIN number must be obtained before the Form 8233 can even be submitted to the IRS and the delay in payment once the Form 8233 has been submitted remains in effect as described in Section 2a above.

B. Travel Expenses

Following the IRS accountable plan guidelines, travel expenses can be reimbursed to a foreign individual upon receipt of the folllowing information:

  • A copy of the individuals I-94 or visa form which indicates the visa status (B-1, B-2, W-B, WT, TN, JI).
  • Original receipts for expenses for which reimbursement is requested. If original receipts are not submitted, the reimbursement is treated as payment for Independent Personal Services and the procedures detailed in Section A above must be followed.