Nonresident Aliens: Processing Tax Exemptions for Foreign-source Participant Stipend Payments

Purpose

This document explains what operating locations must do if participant stipend payments to nonresident aliens are exempt from federal taxes because the payments originate from a foreign source.

Background

For background information on this topic, see the following documents:

Process

The following table describes the process that must be followed by operating locations if the participant stipend recipient indicates on the "Nonresident Alien Participant Stipend Tax Exemption Certificate" that the payments are from a foreign source.

Step

Action

1

Verify that

  • the person has signed and dated the Nonresident Alien Participant Stipend Tax Exemption Certificate, and
  • the grants office or designee has initialed and dated the approval line.

     

    If the form is properly completed, go to step 2.

    If the form is not properly completed, return it to the person with the appropriate instructions and continue to withhold taxes. Take no further steps in this table.

2

Access the record in the Supplier File for the participant stipend recipient through the Oracle Accounts Payable module. Review the coding in the "Supplier Type" field and the Tax Reporting alternative region to ensure that the proper tax status has been recorded. This information flows to the invoices created in the Accounts Payable module and automatically withholds the proper amount when payment is processed.

Refer to the following documents for more information:

Monitoring the Person's Status

The person's tax status must be monitored to ensure that he or she remains eligible for the exemption. If circumstances change and the person is no longer eligible for exemption, taxes must be withheld from future payments and retroactively to the first of the calendar year.

A separate "Nonresident Alien Participant Stipend Tax Exemption Certificate" and other required documentation must be completed for each participant stipend payment awarded and for any change to an award. A new "Nonresident Alien Participant Stipend Tax Exemption Certificate" must also be completed each calendar year.

Document Retention

Retain the "Nonresident Alien Participant Stipend Tax Exemption Certificate" with payment documentation.

Change History

 

 

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