Katerina Tsaknaki, CPA, MBA NRA and Tax Coordinator, Accounting

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1042 and NRA ProcessingSunday, March 18,
2001Track HRMS Session S2-6007
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• Panel Participants
• Karen Banning, University of Kansas
• Dawna Groninger, University of Kansas
• Jennifer Gehrt, Kansas State University
• Linda Parker, Peoplesoft
• Gary Singer, Windstar Technologies, Inc.

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University of Kansas Overview

• One of the 7 Regent Institutions governed by
  State of Kansas
• Comply with reporting of earnings for
  non-resident alien earnings using State
  earnings codes, tax panel information reporting
• Must maintain own time reporting, leave accrual
  and balance information using existing time
  reporting system
• State of Kansas produces the 1042-S forms for KU
  employees
• PeopleSoft V7.6 HRSA No fixes applied

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NRA Issues

• Student Administration Foreign Addresses
• When a student address is entered by SA as
  foreign Job Earns Distribution populated
  automatically
• Default foreign address to Home Address and we
  must manually override to local address

• 1042 Balances Earns/Taxes
• The appropriate effective dates must be entered
  in Tax Data panels in order for correct year to
  be updated.
• Normally this is pay period begin date

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Job Information FICA Status Override
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Available Earnings Codes for NRAs
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Job Earnings Distribution
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Federal Tax Data 1
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Federal Tax Data 2
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Federal Tax Data 3
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State Tax Data 1
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State Tax Data 2
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Local Tax Data
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Time Reporting Time Sheet
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Employee Payline with NR Earns Code after
first calc.
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JPAY159 NRAs Taxed
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JPAY163 1042 Gross Report
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JPAY164 NRAs reaching treaty max in pay period
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JPAY310 Mismatch earns codes on multiple
employee recds
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Kansas State University Overview

• Fall 2000 Enrollment 21,929
• Active Employees 10,000
• Non-Resident Aliens 1009
• 1042 forms in 2000 504

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Kansas State University Overview

• Use delivered PS HRMS 7.51 Education Government
  NRA functionality with all relevant PS fixes
  applied
• Use 1042 processing for payroll only--not
  scholarships and fellowships
• Do not have PS Student Administration
• Follow same basic rules and processes as the
  University of Kansas

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K-States Solutions to Problems with NRA Processes
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Employee Tax Data

• We do not automate Employee Tax Data on
  Installation Table-- we always manually enter
  data in Tax Data

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Address in Personal Data

• Train users to not insert foreign address in
  Home Address
• Use local address in the Home Address
• Use permanent foreign address in the Mailing
  Address, if desired

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Address in Personal Data

• Will receive warning message when tabbing out of
  Country field on Federal Tax Data 3 panel --
  thats okay

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Visa/Permit Data

• Tracking accurate Visa data is critical
• Confusing panel for employee who has had more
  than one Visa type
• Not effective-dated--Visa displays
  alphabetically, not employees current Visa
• Tricky reporting
• Fixed in PS 8?

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NRA Data Integrity

• Added a Save Error Edit to State Tax Data
  requiring Resident checkbox to be No

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NRA Data Integrity

• Employee Tax Audit Reports (SQRs) vs multiple
  on-line edits
• Run audit reports beginning last day of pay
  period through day of final on-cycle pay calc

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Job Earnings Distribution Audits

• Fed Tax Special Status NRA without NRA Earnings
  code in JOB_EARNS_DIST record
• NRA Earnings Code without Fed Tax Special
  Withholding Status NRA
• Multiple active Employment Records and Earning
  Codes in each JOB_EARNS_DIST record are not equal
• Dept ID in JOB is not equal to Dept ID in
  JOB_EARNS_DIST

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Visa Audits

• Employee with Visa Type J2 and FICA Status
  Exempt and enrolled in lt 6 credit hours
• Employee with Visa Type that requires Subject to
  FICA
• Employee with Visa Type J2 not eligible for Tax
  Treaty

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Other NRA Audits

• Fed Tax Data--NRA requires additional withholding
  15.30
• NRA with Citizenship Status Alien Permanent
  is Subject to FICA

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Look out!!

• Watch for custom SQRs that update JOB in
  batch--must also update the JOB_EARNS_DIST record
  at same time

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FICA/SUT Audit Report

• J1/F1 Visas should always be exempt from FICA and
  SUT (unless Substantial Presence Test is met)
• When FICA Exempt, SUT must be Exempt
• When FICA Subject, SUT must be Nonexempt

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Tax Treaty Table

• PeopleSoft re-delivers tax treaty table with each
  major release and with each application update
• Interim changes must be tracked and applied in
  your system

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Tax Treaty Information

• Tax Treaty and NRA information available on our
  web site http//www.ksu.edu/hr/infomgmt/treatysum
  .htm
• IRS Tax Treaty Information is simplified to
  include Income Codes 18 and 19, only

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Substantial Presence Test

• We use manual worksheet to capture SPT
  calculations
• Enter data from worksheet in PS SPT panel so data
  is readily available

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Substantial Presence Test

• Start Date Arrival Date in USA
• Expiration Date On-campus Work Permit Expires

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Substantial Presence Test

• PS 7.51 needs Arrival Date and Visa Issue Date on
  SPT panel--possibly there in PS 8

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PeopleSoft/Windstar Partnership Background

• Partnership formed in December 1999
• Objective To complement PeopleSofts
  non-resident alien taxation processing
  capabilities with the case-by-case tax treaty
  analysis capabilities in Windstars Tax Navigator
• Windstar is developing a two-way interface
  between PeopleSoft Payroll and Windstar Tax
  Navigator

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PeopleSoft/Windstar Partnership Overview
Windstar Tax Navigator
PeopleSoft Payroll
Captures immigration history data
Employee Data
Captures employee data
Determines foreign nationals tax residency and
performs tax treaty analyses
Tax Treaty Analysis Results
Payroll Processing (including Tax
Calculations based on Treaty Rules)
Prepares withholding and tax treaty exemption
forms
Maintains Tax Balances (including 1042)
1042 Tax Balances
Produces 1042-S reports
Produces 1042-S reports
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PeopleSoft Non-Resident Alien Taxation
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PeopleSoft Non-Resident Alien Taxation
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Before they enroll, you must get them here
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Before you pay them, you must know their tax
status
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Information Required

• Demographics
• Family Information
• Immigration History back to 1/1/1985
• Prior Treaty Usage

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Before they enroll, you must get them here
VisaManager
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Before they enroll, you must get them here
VisaManager

• Forms for F, M, J, Q, H, L, O Immigration
  Statuses
• Forms for ongoing maintenance
• Full History
• Full Reporting Fulfillment

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Before you pay them, you must know their tax
status
International Tax Navigator
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Before you pay them, you must know their tax
status
International Tax Navigator

• Performs Full Substantial Presence Test on any
  Immigration History
• Performs Treaty Analyses
• One at a time
• Batch
• Looks forward or back
• Completes Forms for Withholding Reporting

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The Flow
VisaManager
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The Flow
VisaManager
Transition DB
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The Flow
VisaManager
Transition DB
International Tax Navigator
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The Flow
VisaManager
Transition DB
Two Ways, too
International Tax Navigator
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The Flow Coming Soon
VisaManager
International Tax Navigator
Transition DB
What to Do
PeopleSoft
HR/ Payroll
A.P.
Student System
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The Big Picture Coming Soon
VisaManager
International Tax Navigator
New Hires
I9 SS5 W7
Transition DB
Foreign National Information Form PDF Based
FNIF
FNIS
Foreign National Information System
Web Based
PeopleSoft
HR/ Payroll
A.P.
Student System