There are two groups of payment classifications:
- Payments in which the individual provides “services” OR
- Payments where no services are rendered.
The RF recognizes the following payment classifications:
Payment classification is based on the activity and relationship the individual has with the RF in order to receive the payment, NOT what a payment is called. For example: “Stipend” is just a word that means a payment but what the person does to receive the stipend or payment defines the payment classification.
Accurate payment classification is very important as misclassification of payments can lead to RF risk for penalties as well as potential disallowance of funding for programs.
Typical areas reviewed for misclassification are employee versus independent contractors or RF defined Participant stipends versus Fellowships.
If at any time you are unsure of the payment classification, you should contact the office that handles RF HR / payroll or accounts payable matters at your location. If the payment classification is not accurate, all remaining tax and reporting determinations will be incorrect.