Tax Compliance
Non-Resident Aliens
Procurement & Business Services
This information is for all payments/reimbursements paid thru Procurement & Business Services and includes; AU students, AU employees and Non-AU affiliated individuals and companies. It is extremely important that these procedures are followed. Federal and state immigration and tax laws concerning Non-US Citizens are complicated and the forms that will be required vary widely depending on tax status, immigration status and what type of payment and/or reimbursement Auburn University will be making to the individual or company.
Payments and/or reimbursements to Non-US citizens, Non-US companies, students and employees of Auburn University fall under a different set of tax laws and withholding/reporting requirements than those that apply to US citizens and US companies. Generally, such payments made through PBS are subject to 30% federal tax withholding unless an exception applies.
Tax and federal immigration laws restrict the types of services a Non-US citizen may perform and the types of payments and/or reimbursements they are allowed to receive. It is imperative to know before the guest arrives at Auburn their immigration status and whether they are traveling to AU from outside or inside the US.
The
AU Payment and/or Reimbursement Request Form for Non US Citizens and Foreign Companies form is designed to simplify the payment process by summarizing the documentation that will be required to pay the individual and identify required tax withholding. Completing this form in advance of the guest's visit should eliminate delays in payment as well as ensure that Auburn University is compliant with federal tax and immigration laws.
The IRS does not classify a travel reimbursement as a category of income. Travel reimbursements are only associated with the following categories of income:
- Compensation (either dependent or independent)
- Non-Service Scholarship or Fellowship
The category of income is based on the relationship of the payer to the traveler.
F1/J1 students may be reimbursed for expenses on a tax free basis when there is a direct connection between the expense and the business purpose of the University.
Examples of business related expense reimbursements can include:
- If a Non-US student is involved in a competition in which the SCHOOL is a contender and the student must wear a uniform that designates the school, then all actual travel expenses can be reimbursed.
- Expenses were necessary to further a research project of the department under the direction of a supervisor.
- Expenses were necessary to fulfill the University's contract/grant obligations under the direction of a supervisor.
- Student attended a conference/event to officially represent the University at the request of a supervisor.
- If a Non-US student's job requires travel and he/she is paid to travel and the job description includes the necessity of travel, then the student is deemed an employee and the reimbursement will not be taxable. This rule would apply to travel for departmental research, not the student's research which is personal/academic.
If the travel reimbursement is not expressly related to University business then the IRS considers this to be a taxable travel grant/scholarship and appropriate tax withholding will be applied.
- Actual expense reimbursement to an individual for a job interview (not GRA/GTA jobs) is not subject to these guidelines. Please notate the reimbursement is for a job interview on the travel voucher.
- New foreign vendors must register in the AU Vendor Center at www.vendor.auburnuniversity.net.
- Payments to foreign companies for tangible goods (not including software) are not subject to these restrictions.
