Administrative Policies and Procedures Manual - Policy 2180: Foreign Nationals
Date Originally Issued: 07-12-2000
The University invites individuals from other countries to our campus to enhance the educational, research, and public service mission of the University. These individuals include foreign nationals such as students, researchers, lecturers, and conference participants. Foreign nationals may provide a variety of services, and the University may agree to reimburse them for their travel expenses and/or pay them for any services rendered. Payments made to foreign nationals must comply with Immigration and Naturalization Service (INS) and Internal Revenue Service (IRS) regulations, must be allowable by any applicable contracts or grants, and documented with required receipts. There may be additional requirements for tax purposes that are different from than those for legal and/or immigration purposes. Advance planning (up to two  months in some cases) is critical to ensure that foreign nationals can fulfill the intended purpose of the trip and the University can comply with any agreements made. Foreign nationals frequently need to apply for tax identification numbers, which can take up to eight (8) weeks to obtain (refer to Section 6.1. herein).
2. Foreign Nationals
Under IRS regulations there are five (5) categories of individuals: U.S. citizens, permanent resident aliens (i.e. "green card holders'") and immigrants, resident aliens for tax purposes, U.S. Nationals, and nonresident aliens for tax purposes. This policy is concerned only with payments to nonresident aliens who may be taxed by the U.S. on income they receive from U.S. sources. Unless proven otherwise, all foreign nationals visiting the University will be classified as nonresident aliens. (U. S. Nationals may be treated as nonresident aliens for tax purposes depending on individual circumstances.) The following factors are used to determine if income tax must be withheld from payments made to foreign nationals: immigration status and length of stay, country of tax residency, and type of payment being made. A tax treaty may eliminate or reduce the withholding requirement (refer to Sections 4. & 5. herein). Detailed information can be found at the University's Taxation Website (http://taxation.unm.edu/foreign-nationals-info/payments-to-foreign-nationals.html). Taxation is part of the University's Unrestricted Accounting Department (Main Campus).
3. Immigration Status
The immigration status granted to a foreign national by the INS determines whether a payment can be legally made to a foreign national and, if so, what types of payments can be legally made. While a visa permits entry into the U.S., the immigration status is designated on Form I-94 Arrival/Departure Record completed at the port of entry. The University's Global Education Office (http://geo.unm.edu/) can provide assistance with immigration issues. Exhibit A. of this policy provides more information on immigration status.
3.1. Visa Waiver Program
The Visa Waiver Program allows foreign visitors from some countries to enter the US without a visa. These visitors are admitted to the US as either visitors for business (noted as WB on the Form I-94 Arrival/Departure Record in the passport) or visitors for pleasure (noted as WT on the Form I-94 Arrival/Departure Record in the passport).
3.1.1. Business Visa Waiver - WB
Payment rules for individuals with a WB designation are the same as those with a B-1 designation which are described in Section 3.2.1. below.
3.1.2. Tourist Visa Waiver - WT
Payment rules for individuals with a WT designation are the same as those with a B-2 designation which are described in Section 3.2.2. below.
3.2. Business or Pleasure Visa - B
3.2.1. B-1 (Visitors for Business)
UNM can pay travel reimbursement and associated incidental expenses to individuals with a B-1 immigration status for visits of any length or frequency. In addition, UNM can pay honoraria to B-1 visitors but only for an academic activity(ies) lasting not longer than nine (9) days at any single institution and only if the foreign national has not accepted such payment from more than five (5) institutions or organizations in the previous six (6) month period.
3.2.2. B-2 (Visitors for Pleasure)
UNM can pay honoraria, travel reimbursement, and associated incidental expenses to individuals with B-2 immigration status only for an academic activity(ies) lasting not longer than nine (9) days at any single institution and only if the foreign national has not accepted such payment from more than five (5) institutions or organizations in the previous six (6) month period.
Individuals with Border Crossing Cards will be assigned either a B-1 or B-2 immigration status at the port of entry and are subject to the applicable limitations described above.
3.3. Visas Requiring a Sponsor - F-1, H-1B, J-1, O-1, P-1-3, TN
These individuals must be sponsored for immigration purposes by a host organization, as approved by INS or the US State Department, and are "work-authorized" for the sponsoring organization.
3.3.1. Foreign Nationals Sponsored by UNM
If UNM is the sponsoring organization, UNM can pay individuals with a F-1, H-1B, J-1, O-1, P-1-3, or TN immigration status compensation for services, travel reimbursements, and other employment related payments. There may be limitations associated with the individual's specific visa, placed on the type of work for which UNM can pay. Departments should consult University Taxation for details.
3.3.2. Foreign Nationals Sponsored by Another Organization
18.104.22.168. Students with F-1 Designation
In the case of students with an F-1 designation, UNM can only make payments to the student's sponsoring organization. The sponsoring organization would then need to pay the student. Certain pre-approvals may be required. Depending on the circumstances, UNM may wish to request approval to become the student's sponsoring organization. This request should be coordinated through the Global Education Office.
22.214.171.124. Individuals with H-1B Designation
In the case of individuals with a H-1B designation sponsored by another organization, UNM can only pay travel reimbursement.
126.96.36.199. Individuals with J-1 Designation
For individuals with a J-1 designation sponsored by another organization, UNM can pay compensation of services, travel reimbursements, and other employment related payments, but UNM must have prior written approval from the individual's sponsoring organization. The approval must be signed by the Responsible Officer designated on the foreign individual's Form IAP-66.
188.8.131.52. Individuals with O-1, P-1-3, & TN Designations
In the case of individuals with O-1, P-1-3, and TN designations, UNM can only make payments to the individual's sponsoring organization. The sponsoring organization would then need to pay the individual. Certain pre-approvals may be required.
4. Tax Treaties
Some countries have entered into tax treaties with the U.S. which reduce or eliminate the income tax withholding requirements. These treaties vary from country to country and may have specific requirements as to visa type, types of payments, duration of stay, prior visits, and previous treaty benefits taken. IRS requires a tax identification number for any payee who wants to claim treaty benefits. Refer to Section 6.1. herein for information on tax identification numbers. For more specific information on treaty benefits departments should contact the University Payroll Department (for information on foreign nationals who are employees) and University Taxation (for information concerning all other foreign nationals).
5. Types of Payments
The type of payment and the individual's country of tax residency determines whether the University must withhold a portion of the payment for income tax purposes.
5.1. Travel Reimbursement
Travel reimbursements complying with IRS regulations are not subject to income tax withholding.
5.1.1. UNM Employees
Foreign nationals who are UNM employees may be reimbursed for travel expenses in accordance with UAP 4030 ("Travel").
5.1.2. Non UNM Employees
Per IRS regulations foreign nationals who are not UNM employees may be reimbursed for actual lodging and meal expenses (receipts required) or actual lodging (receipts required) and the meal per diem rate allowed by IRS.
5.2.1. UNM Employees
Payments made to UNM employees through the Payroll Department are subject to FICA (social security), Medicare, federal, and state tax withholding unless the payee is eligible for and claims treaty benefits, which may reduce or eliminate the amount withheld. Withholding from employees, including student employees, will be at graduated rates.
5.2.2. Honorarium and Independent Services
Payments to non-employees, such as conference participants and independent contractors, are subject to federal tax withholding at a 30 percent rate unless the payee is eligible for and claims treaty benefits.
5.3. Scholarships and Fellowships
Foreign national students who receive scholarships from the University are subject to the same rules as U.S. citizens/permanent residents as to whether or not the award is taxable. Qualified scholarships or fellowships can be excluded from taxable income if the individual is a candidate for a degree, broadly defined to include any full- or part-time student enrolled at an institution that grants degrees, and the funds are used to pay for tuition and fees required for attendance or other mandatory fees, books, supplies, and equipment required of all students in a particular course of study. Portions of awards used for meals, lodging, non-mandatory medical insurance, travel, personal living expenses, non-mandatory course expenses or other non-course related expenses must be included in taxable income unless excluded by tax treaty.
Foreign national students under immigration status F-1 and J-1 are subject to 14% income tax withholding on the taxable portion of awards unless the student is eligible for and claims treaty benefits, which may reduce or eliminate the amount withheld. Extension of treaty benefits requires the student's signature on IRS Form W-8BEN prior to issuance of the payment or credit to the student's account.
Royalty payments for distribution or usage within the U.S. are subject to income tax withholding at a rate of 30%, unless the payee is eligible for and claims treaty benefits, which may reduce or eliminate the amount withheld.
6. Taxability Requirements
6.1. Tax Identification Numbers
Individuals receiving compensation and honoraria payments must have a social security number (SSN) or individual taxpayer identification number (ITIN). This number must be used on all disbursement documents along with a notation that the payee is foreign. If the individual has previously studied and/or worked in the U.S., he or she may already have a SSN. Visa holders, except B-1 and B-2, are eligible to apply for a SSN. A SSN is issued within about two (2) weeks after receipt of application. Individuals traveling on either a B-1, B-2, WB, or WT designation are not eligible for a SSN and must have an ITIN. Processing takes approximately six (6) to eight (8) weeks so departments should contact University Taxation as soon as possible. Instruction on how to obtain a SSN or ITIN can be found on the University Taxation Website or by contacting Taxation.
6.2. IRS Reporting
All payments, other than travel reimbursement, made to foreign nationals are reported to the IRS. A copy of the reporting form (1042S or W-2) is given to the foreign national for use in completing his or her personal income tax return.
Exhibit A. - Immigration Status Chart