Business Services
BUSINESS SERVICES POLICY AND PROCEDURE DOCUMENT (BSPPD) # 7D
PAYMENT OF NON-EMPLOYEE FEE AND TRAVEL EXPENSES
(Revised August 1, 2001)
INTRODUCTION
In the process of fulfilling their mission to provide educational programs, UW-Extension departments may find it necessary to provide payments to individuals who are not employed by the University. This document focuses on paying individuals for services, prizes, awards, scholarships, participant support and travel reimbursement. It does not specifically discuss payroll or payments to business entities.
GENERAL POLICY
UW-Extension will comply with the rules set forth by the UW-System Administration, Board of Regents and the federal government concerning non-salary payments as established in the following documents:
- Section 117 of the IRS Code
- UW System FAP #31 "Payment for Personal Services"
- UW System FAP #46 "Prizes, Awards and Gifts"
- UW System FAP #36 "Travel Regulations"
Business Services Policy and Procedure Document (BSPPD) #3 "Payment for Personal Services" provides additional information.
UW System FAP #31 and UW-Extension Business Services BSPPD #3 provide guidance in determining whether individuals providing services should be compensated via payroll as an "Employment Service" when there is an employer-employe relationship or as an "Independent Contractor Service" through the accounts payable process using a PIR form when an employer-employe relationship does not exist.
For services that involve a fee that will exceed $5,000 see BSPPD #3 for additional steps required before a formal commitment is made to an individual.
PROCEDURES
The Payment to Individual Report (PIR) should be used to request fee and/or travel related payments to individuals who are not UW employees. An individual is defined as "a person who is not a company, partnership, corporation, association, organization, trust, or estate, and for whom an employer-employee relationship does not exist." Examples of valid payments processed via a PIR are payments to individuals for services, prizes and awards, scholarships, participant support and travel reimbursement. The Travel Expense Report (TER) is used to reimburse employe expenses. Note: There is an exception for the reimbursement of job interview candidates, which requires the processing of a TER, signed by the candidate.
FEDERAL REPORTING REQUIREMENTS
To be in compliance with Federal law, the University must maintain a database of Taxpayer Identification Numbers (TIN) for all entities (including individuals) who are service providers to the University. Individuals receiving payments for fee or travel related expenses must provide their Social Security Number (SSN). The SSN# must be entered on the PIR form. If the collective (systemwide) total of all payments on a calendar year basis is $600 or more, the University is required to issue a form 1099 to the IRS (a copy is sent to the individual).
In situations where an individual is being reimbursed for travel related costs only (i.e., volunteer) and the individual adequately accounts for travel costs, the payment is not included in the payment database for 1099 reporting purposes. For the purpose of defining what constitutes "adequate accounting" the following should be used as a guide:
| Type of claim | Evidence |
|---|---|
| Hotel claim | Receipt must be original |
| Airfare claim | Original or photocopy of air passenger coupon |
| Car rental | Receipt must be original |
| Meal claims | Receipts not required if claims are reasonable |
| Miscellaneous | Receipts required if over $25 per claim |
Because of the limited space available on the PIR form, it is not necessary that claims be itemized on a per claim, per day basis. Also, it is not necessary that departure and arrival times be provided. A claim for a service that involves two days and three nights could be structured as follows on a PIR:
| Service | Expense |
|---|---|
| TOTAL | $590 |
| Airfare | $380 |
| Lodging | 90 |
| Meals | 75 |
| Ground Transportation | 30 |
| Miscellaneous | 15 |
FURTHER INFORMATION
Questions related to payments to non-employees and the preparation and processing of the Payment to Individual Report may be directed to Accounting Services (262-0180).