Inviting the World Foreign Nationals and Tax Compliance: Taxable Status Determination Form Training

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Inviting the World Foreign Nationals and Tax
ComplianceTaxable Status Determination Form
Training

• Presented by
• Michelle Pope, Team Leader, NRA Finance Workteam
• Heidi Thomerson, Tax Associate, SWOHR

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Agenda

• I. Some New Vocabulary

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Definition of a Guest

• A guest is an individual who is invited to a
  University of Alaska sponsored event.
• This process is not used for employment related
  travel.

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New Vocabulary

• Foreign National- Person who is not a U.S.
  Citizen or Permanent Resident
• Could be coming from a foreign country or from
  another institution from within the U.S.
• Nonresident Alien (NRA)- A foreign national that
  falls under a special tax system as defined by
  the IRS
• There are different withholding requirements and
  regulations governing the type of payments these
  individuals may receive.
• Nonresident Alien Tax Specialist (NRAT)-
  Individuals at each MAU that coordinate the tax
  compliance for the nonresident alien tax system.

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Immigration Versus Tax

• Immigration
• U.S. citizen
• Lawful Permanent Resident
• Foreign National

• Tax
• U.S. citizen
• Lawful Permanent Resident
• Resident Alien for Tax Purposes
• OR
• Nonresident Alien for Tax Purposes

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The Two Tax Systems

• U.S. Tax System
• U.S. Citizen
• Lawful Permanent Resident
• Resident Alien for Tax Purposes

• Nonresident Alien Tax System
• Nonresident Alien for Tax Purposes

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The Two Tax Systems

• U.S. Tax System
• Taxed on worldwide income
• May claim itemized deductions

• Nonresident Alien Tax System
• Taxed on only U.S. sourced income
• Limited itemized deductions

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Penalties for Noncompliance to Nonresident Alien
Tax System

• Penalties to the University
• Risk of IRS Audits
• Penalties to Departments
• Must pay uncollected taxes
• Penalties to Visitors
• Inconvenience and possible monetary difficulties
  if tax is not properly withheld

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Agenda

• Some New Vocabulary
• Inviting to a UA Sponsored Activity

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Ask EVERYONE the Question

• Are you a U.S. Citizen or Permanent Resident?
• Use the TSDF or Include on
• Travel Authorization Forms
• Purchase Requisition Forms

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Are you a U.S. Citizen or Permanent Resident?

• Yes

• No

Complete the Taxable Status Determination Form
(TSDF)
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Agenda

• Some New Vocabulary
• Inviting to a UA Sponsored Activity
• III. Taxable Status Determination Form

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Taxable Status Determination Form(TSDF)

• Department Completes

At top of form
In Section C
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Taxable Status Determination Form(TSDF)

• Invitee Completes

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Taxable Status Determination Form(TSDF)

• Invitee Completes

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Taxable Status Determination Form(TSDF)

• Invitee Completes

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Taxable Status Determination Form(TSDF)

• Department Completes
• Visitors may be performing more than one
  activity. Check all that apply.
• Visitors may be receiving more than one type of
  payment. Check all that apply.

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Taxable Status Determination Form(TSDF)

• Department Responsibility

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Taxable Status Determination Form(TSDF)

• NRAT Responsibility
• Contact Foreign National with any questions
• Determine withholding rate
• Notify department of status within 24 hours
• Work with department regarding payment
  withholding (if applicable)

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TSDF Paper Flow
Invitee
Department
NRAT
Department
Use rate for payment calculation Send copy of
form with TA, TER, Purchase requisition
Complete form
Review form Is it complete?
Resolve questions Determine withholding rate
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Agenda

• Some New Vocabulary
• Inviting to a UA Sponsored Activity
• III. Taxable Status Determination Form
• IV. Making A Payment

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Payments Made to Invitee
Type of payments

• Lodging or travel payments made to or on behalf
  of individual
• Amount paid for academic activity (I.e. lecture)
• Independent Personal Services- Usually has a
  Purchase Order
• Any other payment (i.e. prize, award, royalties)

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Payments Made to Invitee

• Contact NRAT when making payments
• Look at TSDF for determined withholding rate
• Travel W/H rate of withholding from travel
  payments including per diem or payments made
  directly to individual or on their behalf
  (i.e.airline, hotel, etc.)
• Tax Treaty W/H If individual signs tax treaty
  forms (NRAT will send them to department), then
  apply this withholding to all payments other than
  travel
• Default W/H If individual does not sign or is
  ineligible for tax treaty benefits, then apply
  this withholding to all payments other than
  travel

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Agenda

• Some New Vocabulary
• Inviting to a UA Sponsored Activity
• III. Taxable Status Determination Form
• IV. Making A Payment
• V. Resources for Departments

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Resources
Forms and Procedures TSDF in PDF enterable
format http//www.alaska.edu/hr/forms/PDF_ent/tax
_status_determination_form.pdf TSDF
Instructions http//www.alaska.edu/hr/forms/PDF/t
sdf_instructions.pdf Department Instructions
http//www.alaska.edu/hr/forms/PDF/tsdf_dept_instr
uctions.pdf Are you a U.S. Citizen or Permanent
Resident? label template http//www.alaska.edu/h
r/forms/PDF/tsdf_us_citizen_label.pdf NRAT
contacts - UAA Martha Nelson 786-1446
anmrn_at_uaa.alaska.edu - UAF Patty Dyer-Smith
474-6406 fnpld_at_uaf.edu - UAS Paul Empson
796-6497 paul.empson_at_uas.alaska.edu
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Agenda

• Some New Vocabulary
• Inviting to a UA Sponsored Activity
• III. Taxable Status Determination Form
• IV. Making A Payment
• V. Resources for Departments
• VII. Evaluation and Questions

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Further Questions
If you have additional questions or comments
after todays meeting, feel free to
contact Your NRAT representative for your
campus