Payments to Nonresident Aliens (NRA) - Stipend

Purpose

In order to comply with Federal (Internal Revenue Service and Treasury Department) and State (Franchise Tax Board) rules and regulations, each SFSU department must comply with these procedures when making Accounts Payable payments honorarium recipients who are considered nonresident aliens for tax purposes. The Chancellor’s Office requires CSU campuses to comply with the Internal Revenue Code, California Revenue and Taxation Code, and California State University policies and procedures regarding nonresident alien taxation issues. These procedures are intended to assist campus departments when making payments to nonresident aliens.

Procedure and Responsibility

Step 1
Campus Department or Project Director:

The campus department or project director must determine if the recipient (payee) is a US Citizen, Permanent Resident or Nonresident Alien (NRA) by administering the Vendor Data Form STD. 204:

Administer the Vendor Data Form STD. 204 (required by Accounts Payable before any payment can be processed). The form is available online at:

  • If the payee indicates on the Vendor Data Form STD. 204, Box 4 – Vendor Residency Status that he/she is a US Citizen or Permanent Resident Alien (“green card holder”) for Federal tax purposes,the department or project director will follow usual departmental and Accounts Payable payment procedures.
  • If the payee indicates or provides information on the Vendor Data Form STD. 204, Box 4 – Vendor Residency Status that he/she is a NRA for Federal tax purposes.

Step 2
The Department or Project Director will:

  1. Review the Stipend Payment Authorization Form and; If the project is funded by Office of Research and Sponsored Programs (ORSP) grant [see Part I, Line 4, Dept.#3080 or #3138 on the Stipend Appointment Form]. Send the Stipend Appointment Form and Vendor Data form STD. 204 to the respective Grant Administrator in ORSP. The Grant Administrator will work with the Tax Specialist accordingly.
  2. For all other non-ORSP projects, provide and request the NRA to complete a “SFSU Foreign National Information Form” (FNIF). All NRA payees must complete this form (designed to collect information necessary to determine the US tax residency status of non-US citizens) before receiving any type of payment(s) and/or disbursement(s).
  3. Instruct the NRA payee to schedule a meeting with the Tax Specialist to discuss his/her tax residency status, tax withholding requirements and Federal tax treaty benefits; and BRING the following documents to his/her appointment with the Tax Specialist:
    • SFSU FNIF with required supporting documents stated at the top of the form;
    • Stipend Payment Authorization Form, and;
    • Vendor Data Form STD. 204.

Step 3
Tax Specialist will:

  1. Review the documents and information on Vendor Data Form STD. 204, Stipend Appointment form, SFSU FNIF with all the required supporting documents stated on the top of this form;
  2. Determine whether some or all of the payment(s) are exempt under a federal income tax treaty; and,
  3. Based on the information provided, determine the classification of the payment, payment for services or taxable scholarship. The Tax Specialist will stamp Vendor Data Form STD. 204 and the Stipend Appointment form with the applicable tax withholding information.

These two forms will be forwarded to the campus department or project director through the stipend recipient.

Step 4
The Campus Department or Project Director will:

  1. For a non-SFSU student NRA payee – forward the Vendor Data Form STD. 204 and Stipend Payment Authorization forms to Accounts Payable.
  2. For a SFSU student NRA payee – forward the Vendor Data Form STD. 204 & Stipend Payment Authorization forms to the Office of Student Financial Aid (OSFA), who in turn will forward the forms to Accounts Payable. OSFA is required to record the stipend amount the student will receive.

 

For Research and Sponsored Program (RSP) Accounts:  All forms - Vendor Data Form STD. 204 and Stipend Payment Authorization form must be returned to ORSP, who will forward the forms to the appropriate department for processing - Accounts Payable and/or ORSP (see above Step 1 - 3A or 3B).

As a reminder, ORSP must authorize all payment requests for stipends chargeable to ORSP accounts PRIOR to the activity or event taking place.  NOTE:  The above procedures do not fully describe the entire process but do outline the necessary steps that campus departments or project directors need to adhere to. Should a campus department or project director need further clarification on the above procedures or need additional information regarding making payments to NRA stipend and honorarium recipients, they should contact Tax Specialist, Young Kim at (415) 338-2325.