Effective Date: |
August 15, 2016 |
Function: |
Payment Taxation Compliance |
Contact: |
The Research Foundation for SUNY ("RF") ensures that "Non-Salary" taxable payments to the following individuals are reported and taxed according to Internal Revenue Service ("IRS") rules:
This procedure describes the steps needed to ensure that Non Salary Payments are properly documented, taxed and/or reported.
Identifying the Taxable Benefit and Recipient
Step |
Role or Responsibility |
References or Tips |
Identify benefits planned, paid or provided that represent Non-Salary Payments.
- Call or send questions to payroll@rfsuny.org if you still need help with determinations. |
Operating Location |
Refer to the "Taxation and Reporting for Non-Salary Payments – Guidance" document.
Refer to the “Business Expenditures and Personal Use” section of this document |
Complete the “Non-Salary Payment Determinations” form and establish if taxable and/or reportable and document the circumstances. |
Operating Location |
Use of form: - Required when amounts are taxable and / or reportable - To document exempt or excluded amounts when no other RF form or documentation exists Example: You would not use this form for substantiated business travel or IRS moving expenses reimbursements since other supporting RF forms exist. |
Document the amount or Fair Market Value. |
Operating Location |
Refer to the Fair Market Value section of this document. |
If the payment is not taxable and/or reportable, proceed with the payment and retain the documentation with the payment information. |
Operating Location |
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If the payment is taxable and/or reportable, provide the completed form: - RF Employees – to the appropriate RF payroll staff at your location for processing - SUNY Employees – to RF central office at payroll@rfsuny.org for processing |
Operating Location Payment Staff |
- Refer to the "Processing for RF Employees" section of this document for RF employees. - Refer to the "Processing for SUNY Employees" section of this document for SUNY employees. |
Processing for RF Employees
Step |
Role or Responsibility |
References or Tips |
Log in to Oracle. |
Operating Location Payroll Staff |
Refer to the process help document for entering a nonrecurring earnings or deduction element for assistance. |
Direct Payments - Open the individual’s People form. - Click the Assignment button to open the Assignment form. - Click the Entries button to open the Element Entries form. - Add the "Misc Inc Direct" element to the individual’s record. - Click Entries to open the Entry Values form. - Enter the amount and select the reason for the payment from the list of values. |
Direct Payments - Payments or benefits identified and paid through the RF payroll system. |
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Non-Direct Payments - Open the individual’s People form. - Click the Assignment button to open the Assignment form. - Click the Entries button to open the Element Entries form. - Add the "Misc Imputed Inc" element to the individual’s record. - Click Entries to open the Entry Values form. - Enter the amount and select the reason for the payment from the list of values |
Non-Direct Payments – Taxable payments or benefits provided outside the RF payroll system such as through the RF accounts payable system or from a vendor. |
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Note: The above instructions also apply to Non-Resident Aliens for tax purposes. |
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Processing for SUNY Employees
Step |
Role or Responsibility |
References or Tips |
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Call the RF central office when this activity is identified if you need additional guidance. |
Operating Location |
Send questions to payroll@rfsuny.org or contact the Payment Compliance Manager for further assistance |
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Discuss with the appropriate SUNY HR office staff to ensure that:
- SUNY policy and procedures are followed. - The miscellaneous payment or benefit is consistent with sponsor requirements, is approval by the appropriate SUNY and sponsored programs staff to process. |
Operating Location |
SUNY is a separate employer and processing should be reviewed first as consistent with SUNY policies, procedures and practices. Refer to the Taxation and Reporting for Non-Salary Payments – Policy. For more information on the Ethics laws, see the SUNY Compliance website. |
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Ensure you collected the basic information needed to add the SUNY employee to Oracle on the Non-Salary Payment Determinations form. |
Operating Location |
The RF needs required information for year-end W-2 reporting, such as a social security number (SSN). |
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Send a copy of the Non-Salary Payment Determinations form to the RF’s central office at payroll@rfsuny.org. |
Operating Location |
As the office of record you keep original backup at your location |
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Central office payroll reviews the Oracle payroll records to determine if the individual is a previous RF employee: - If yes – Central Office establishes the assignment with a “term process pending” status. - If no – continue to next step. |
Central Office payroll |
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Set up a SUNY biweekly assignment or continue with the RF assignment in “term process pending” status |
Central Office payroll |
IMPORTANT - A SUNY biweekly assignment is for Non-RF Non-Salary Payment activity and should not to be confused with SUNY monthly Income Fund Reimbursements ("IFR".) |
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Direct Payment: - Open the individual’s People form. - Click the Assignment button to open the Assignment form. - Click the Entries button to open the Element Entries form. - Add the "Non RF Misc Inc Direct" element to the individual’s record. - Click Entries to open the Entry Values form. - Enter the amount and select reason for the payment from the list of values. - Ensure the SS and Medicare tax is set for withholding. - For RF “term process pending” assignments ensure the income taxes are set to exempt. - Forward a copy of the form to the central office award monitoring team for final action.
Non-Direct Payment: - Open the individual’s People form. - Click the Assignment button to open the Assignment form. - Click the Entries button to open the Element Entries form. - Add the "Non RF Misc Imp" element to the individual’s record. - Add the associated deduction element. - Click Entries to open the Entry Values form. - Enter the amount and select reason for the payment from the list of values. - Ensure the SS and Medicare tax is set for withholding. - For RF “term process pending” assignments ensure the income taxes are set to exempt. - Run a Quick pay to test for a net effect of $ 0.00 - Forward a copy of the form to central office award monitoring team for final action. |
Central Office payroll |
Direct Payments – Taxable Payments or benefits identified and paid through the RF payroll system.
Important note: Different elements exist for moving expense reimbursements as there are special rules for this type of activity. |
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Central Office payroll |
Non-Direct Payments – Taxable payments or benefits provided outside the RF payroll system such as from a vendor.
Important notes: - Different elements exist for moving expense reimbursements as there are special rules for this type of activity. - This is a transaction to record taxable or reportable non salary payments or benefits. Since it was extended through a 3rd party, and not RF systems, SS and Medicare must also be part of gross. This solution also requires the grant to be charged for full employee and employer share of SS and Medicare. |
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Business Expenditures and Personal Use
When amounts or values are provided for business purposes, but could also lead to personal use (e.g. company car, club dues), the cost or value of the portion that is personal use must be calculated as a taxable benefit. Documentation must identify
What portion was business or personal
The taxable portion must be paid or provided as set forth in these policy and procedures, unless the individual agrees to pay back the RF for the assigned value
Fair Market Value
Operating Locations will need to determine the Fair Market Value or the amount subject to tax and reporting rules if a dollar value is not assigned to Non-Salary Payment. Fair Market Value (FMV) is the amount a willing buyer would pay to an unrelated willing seller where neither one is forced to conduct the transaction and both have reasonable knowledge of the facts.
Campuses can determine FMV by researching similar products to come up with an estimated value. In some cases campuses might need to determine the FMV for portions or allocations of costs or services received by the employee.
Monitoring Non-Salary Payments
The RF considers it a best practice to properly classify payments as taxable and/or reportable prior to making the payment. However, there are times when a determination is made after the payment occurred. Campuses should monitor accounts payable payments to employees:
Operating location should encourage staff to provide payment description language that identifies the business connection for the payment to make it easier to review payments. The RF suggests monitoring on a monthly basis but no later than quarterly, as your campus deems necessary.
Employee- an individual engaged to provide services to an organization where the organization controls what services are performed and how they are performed.
Direct Payments- Payments or benefits identified and paid through the RF payroll system.
Non-Direct Payments– Taxable payments or benefits provided outside the RF payroll system such as through the RF accounts payable system or from a vendor.
Non-resident Alien (NRA)- IRS residency status for tax purposes that includes non-U.S. citizens that are not resident aliens.
Non-Salary Payments– Amounts paid or provided and generally processed outside the biweekly payroll process.
Reportable– Income required to be reported to the IRS on a year-end tax statement.
U.S. Citizen or "Resident Alien"- IRS residency status for tax purposes which includes US Citizens and non US Citizens that are Permanent Residents (Green Card) or a Resident Alien (meeting the Substantial Presence Test).
RF
Taxation and Reporting for Non-Salary Payments Guidance
Compensation Reporting Guidelines
Establishing and Maintaining Campus Bank Accounts and Petty Cash Funds
Unrestricted Fund Expense Policy
Non-Salary Payments Determinations
Date |
Summary of Change |
January 26, 2022 |
Updates to links & contact information |
August 15, 2016 |
New procedure. |