Paying non-US visitors and vendors
Florida International University is subject to different reporting and withholding requirements depending on whether it is making payments to a U.S. person or a foreign person or entity.
A Form W-9 is generally REQUIRED from ALL U.S. vendors—U.S. citizens, U.S. permanent residents (green card holders), and entities organized in the U.S. (such as LLCs and Corporations).
- The vendor may be a U.S. vendor operating abroad.
- The vendor may be a foreign vendor with a U.S. presence (e.g. U.S. payment address, phone number, or bank account).
W-8 is REQUIRED of foreign vendors (with mandatory 30% withholding unless exempt or reduced by tax treaty) when:
- Services will be performed in the U.S. (also includes rent, display, or use fees, etc.…)
- Royalties, software licenses, broadcast rights, or other intellectual or intangible property.
Foreign individuals complete the IRS’ one-page W-8BEN (for non-US individuals)
Individuals complete Part I lines 1, 2, 3, and 4 (if different than 3) and sign Part III.
To claim a tax treaty, they also need to complete Part I lines 5 or 6, line 8, and Part II.
Foreign entities (companies, museums, non-profits, all entities other than banks) should provide W-8BEN-E
All foreign entities completing either Form W-8BEN-E need to complete Parts I lines 1, 2, 4, 6, and 7 (if different) and XXIX. If the foreign entity is claiming benefits of an income tax treaty, they also need to complete Part III.
To make sure the University complies with applicable withholding, remitting, and reporting to the IRS, please contact the Tax Compliance Office via email as soon as you are aware you might be making the payment to allow us to work with you to make a timely, compliant payment. Failure to contact us ahead of time may delay the payment, result in the paying department being charged the tax that should have been withheld to bring the University into compliance, or may preclude the department from being able to make the payment.
Because different facts can change the required tax treatment and available options to reduce or avoid it, it is important to gather complete information and to submit that to the Tax Office ahead of time. Because some IRS compliance processes can take two months or longer, when possible please notify us at least two months before the payment is to be made.
Legality of Payments
Caution: US law significantly restricts what employment foreign nationals may accept. For payments for services, of honorariums, or stipends to individuals who will be physically present in the U.S. for any amount of the time, the University first must determine if it is legal to pay the recipient based on the payment reason and the payee’s visa/immigration status. This needs to be determined before the University commits to making a payment. There are some payments the University cannot make by law regardless of what may have been promised.
For additional information regarding honorarium payments, visit our Honorarium Payments page.
For verifying acceptable visa types that allow the University to make a payment, please contact the Tax Compliance Office. For assistance in understanding how a payee can acquire a certain visa type or visa waiver, please contact the Immigration Service Manager, Qian Liu, at the Office of the Provost.
Withholding Requirements and Treaty Options
Once the Tax Compliance Office has verified the University can legally pay a recipient, withholding and reporting requirements must be determined for all payments to foreign individuals or entities. Before case-specific considerations, the default requirement is that the University must withhold 30% of a payment to a foreign recipient and remit it to the IRS. The type of payment, the payee’s country of residence, and other facts may provide options for reduced withholding. The payment and withholding are reported at the end of a year on Form 1042-S to both the IRS and the payee, much like a 1099-MISC or W-2 to a U.S. payee.
Foreign Payments with Purchasing Cards
When the University makes purchases using a Purchase Order, University systems and processes allow for review of international tax issues to facilitate the University’s compliance with Federal tax law. Because P-Card payments are not reviewed until after the payment has been made, there is no way to screen P-Card payments for tax withholding. If P-Cards are used to pay foreign vendors for certain purchases, it leaves the University liable for the tax that should have been withheld.
P-Card holders and approvers should be aware that certain payments are NOT to be made to foreign vendors using P-Cards. P-Card reviewers should educate their P-Card holders not to use P-Cards for certain foreign payments as discussed below. Reviewers should look for payments made to foreign vendors in their review to reinforce and remind the holders as needed. Reviewers can look at supporting documentation, vendor address, and for foreign currency amounts to identify possible foreign payments.
P-Cards CAN be used for payments to foreign vendors for the purchase of tangible (physical) goods, for example:
- scientific equipment
- a copy of a book
The payment of conference taking place in a foreign country:
- foreign hotel accommodations, meals, transportation are not taxable
Paying for services performed by a non-US person outside of the US, for example:
- an interpreter
- tour guide
- foreign publisher (to publish content in a foreign magazine)
P-Cards CANNOT be used for payments to foreign vendors for the following (instead please use a Purchase Order):
- Software purchase, software licenses, or software maintenance
- Web based services & subscriptions
- Use fees
- Broadcast rights
- Music fees
- Online access to digital information or databases
- Honoraria/stipends/compensation/other payments for foreign persons performing services or visiting in the U.S.
- Scholarships/allowances for students attending foreign universities or programs
- Prizes or awards to foreign persons
For additional information, you can also review the following: