Awards and Prizes
Payments to individuals for appreciation, recognition, prizes, and awards are considered taxable income to the recipient. Awards and prizes to non-employees must be for a valid business reason, which may include a contest, door prize, etc. without the purchase of a chance or ticket.
Awards and prizes to non-employees are processed using the Vendor Payment Form. Please include the following information as attachments: (1) Award Letter (2) Description of Program or Competition (3) List of Recipients (4) Announcement (e.g. flyer) of the Competition (if available). This additional information is mandatory.
An honorarium is a one-time payment granted in recognition of a special service or distinguished achievement for which propriety forbids any fixed business price to be set and is manifested by an activity such as a special lecture, participation in a workshop or panel discussion, or similar activities. The payment of an honorarium may not be made to a person employed by William & Mary.
The payment of an honorarium may not be used in lieu of a consulting agreement or independent contract as a means of paying compensation for professional services. A request for payment of an honorarium must be submitted to Accounts Payable on a Vendor Payment Form and must be accompanied by an Honorarium Understanding Form. Honorarium payments must be charged to an honorarium expenditure account.
William & Mary complies with federal and state tax regulations governing any applicable taxability, tax reporting and/or withholding of taxes on any university honorarium payments.
In order to promote participation in a research study and for the university to remain competitive in the research field, it may be necessary for participants to receive incentive payments in the form of cash or gift cards (“value-added card”). When cash or value-added cards are awarded, W&M must comply with Internal Revenue Service (IRS) tax regulations, federal, state and sponsor guidelines.
Research incentives in the form of value-added cards may be awarded to participants for a face value not to exceed $100.00 per instance. If payments will be made to a particular participant for a face value in excess of $100.00; to ensure proper tax reporting and withholding, the Financial Operations team strongly encourage you to pay by voucher, rather than by cash or gift certificate.
Research participants should be informed that information collected allows W&M to meet government reporting obligations and precautions are in place to keep their information secure. Participants may be given the opportunity to participate without receiving payment if they do not wish to provide identifying information. In order for a research participant to receive compensation one of the following forms should be completed:
Please see the processes below for cash and gift card payments.
Direct Payments by Cash
Payments to research participants by cash will be made by:
(1) Requesting a cash advance. Departments should follow the College’s outlined cash advance process.
(2) Research participants must sign an HSP (log or voucher) at the time they actually receive the cash. The form to use depends on the cash amount.
(3) Departments will document use of their cash advance by processing a Vendor Payment Request Form (VPRF). The proper back up documentation will be the HSPs (logs or vouchers). The VPRF processing will clear the outstanding advance. The only portion that is payable against the advance is the sum of all cash distributed.
Direct Payments by Gift Cards
Purchase of Gift Cards for the purpose of payments to research participants will be purchase by the researcher by:
(1) Requesting a cash advance. Departments should follow the College’s outlined cash advance process.
(2) Researcher will purchase the gift cards and maintain original receipts from vendors of all gift cards purchased.
(3) Researcher is responsible for the control and accountability of all gift cards purchased and reimbursement would only be permitted for those gift cards accounted for by the signed participant Human Subject Payment (Log or voucher).
(4) Research participants must sign an HSP (log or voucher) at the time they actually receive their gift card payment. The form to use depends on the amount of the gift card.
(5) Departments will document use of their cash advance by processing a VPRF. The proper back up documentation will be all gift cards purchase receipts and all HSPs (logs or vouchers). The VPRF processing will clear the outstanding advance. The only portion that is payable against the advance is the sum of all cards distributed.
(6) The AP office will not be able to credit any portion of the advance for gift cards that are not distributed to participants.
US Immigration Law classifies people into 3 categories: US Citizen, Permanent Resident or Non-Resident Alien (NRA). A NRA is admitted to the US temporarily in a specific immigration/visa status for a specific purpose. When they enter the US, the immigration officer issues them an I-94 card showing the status. The status (B-1, WT, etc.) determines in which activities (work, study, visit) the NRA may engage while in the US.
It is the responsibility of AP and Payroll Offices to ensure the compliance of Federal Regulations applicable to all payments made to Non-Resident Aliens following basic guidelines provided by: (1) Department of Homeland Security, (2) Department of State, (3) Internal Revenue Service which stipulates that any money paid to any NRA individual is both taxable and reportable.
All payments made to, or on behalf of, a NRA must be reported to the Internal Revenue Service (IRS), using Form 1042-S. In addition, all payments are subject to federal income tax withholding unless they are specifically exempted by either US tax law or by an income tax treaty. (Note: there are tax treaties with over 40 countries, each of which are unique and can change frequently).
To apply for tax treaty benefits, the foreign national must follow the process indicated:
- Complete Foreign National Information Form on Financial Operations – Payroll website. http://www.wm.edu/offices/financialoperations/documents/foreignnational.pdf
- Submit copies of all US entry and exit customs stamps in passport, I-94 card (front and back) and visa stamp if applicable. (Canadians and beneficiaries of the Visa Waiver Program will not have visa stamps.)
- Complete Form 8233 Exemption from Withholding on Compensation for Independent Personal Services of A Nonresident Alien Individual (completed by visitor and withholding agent). http://www.irs.gov/pub/irs-pdf/f8233.pdf (instructions- http://www.irs.gov/pub/irs-pdf/i8233.pdf)
- W-8BEN Certificate of Foreign Status of Beneficial Owner for US Tax Withholding http://www.irs.gov/pub/irs-pdf/fw8ben.pdf (instructions- http://www.irs.gov/pub/irs-pdf/iw8ben.pdf )
In accordance with IRS regulations a payment request with lack of documentation will result in the highest tax withholding of thirty percent.
In the event that a payment or expense reimbursement request for a NRA is received after the individual has performed services for the university, or has been promised a payment or expense reimbursement and the proper IRS procedures were not followed, the Department will risk having the payment or expense reimbursement denied or be held liable for any tax withholding requirement. In addition, the Department will be responsible for any under withholding of tax, interest and/or penalties assessed in the event of an IRS or INS audit.
William & Mary employees are not permitted to pay a NRA from personal funds; this type of payments may not be reimbursable to the employee since it is perceived as a tax avoidance tactic by the IRS.
Payments to Individual for Services
William & Mary may obtain the services of an independent contractor. The definition of independent contractor is one who is responsible for payment of his/her self-employment taxes; who is not subject to the control of another as to the means and methods for accomplishing the work, but only as to the results; who engages in the pursuit of independent practice to the public; who pays their own expenses.
The Board of Visitors By-Laws delegates contract signature authority to the President, Provost, Vice President for Administration or Vice President for Finance depending on contract type. They have authority to sub-delegate. To sign a contract an employee must have written delegation to do so. Delegation is granted to specific position & individual and training is required to receive and retain authority. To find out who has delegated authority to sign contracts in your department, please contact the Procurement Department management team.
Payment to individuals for services performed must be made through the Accounts Payable department.
- Requests for payment must be submitted to Accounts Payable on a Vendor Payment Form.
- Requests for payment to independent contractors (as defined by IRS) must be accompanied by a valid contract signed by all authorized parties on an Independent Contractor Form
- In addition, all contracts must be entered into eVA to ensure compliance with Procurement processes.
- a photocopy of the image of the canceled check;
- a photocopy of the bank statement (for ACH debits or checks that were not cleared through the Federal Reserve); or
- a photocopy of the credit card statement showing that charge to the employee's account.
Whenever the original receipt is not available a written explanation is required for each un-receipted charge. For security and confidentiality purposes, we recommend that you blacken or otherwise hide personal credit card numbers on any receipts submitted to Accounting for processing.
Personal reimbursement can be issued to faculty, staff, and students who have used their own funds to obtain small items not available through Procurement and Contracts. There are a limited number of circumstances where reimbursement is the appropriate method to conduct the university’s business:
- Express services when out of town
- Business meals including catering
- Moving and relocation expenses
- Printing if less than $50
- Conference Fees
- Parking fees and tolls
- Personal Vehicle Mileage
- Public carriers
- Continuing Education course tuition
- University-owned vehicle & boat licenses/tags/decals
- Emergencies only with written justification
An individual requesting an ineligible reimbursement will be given one warning. Subsequent requests will not be reimbursed.