Nonresident Alien Taxation
Alien Taxation
and Forms
and Other Resources
Paying Nonresident Aliens (NRA)
Independent Contractor
Independent Contractor
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 paying nonresident aliens. The Chancellor’s Office requires CSU campuses to comply with the Internal Revenue Code, California Revenue and Taxation Code, and California State University polices and procedures regarding nonresident alien taxation issues. These procedures are intended to assist campus departments when contracting with nonresident alien Independent Contractor(s). These procedures for nonresident aliens are in addition to all current contract/payment procedures required by Human Resources Safety & Risk Management (HRS & RM) , Procurement and Accounts Payable Departments.
Procedure and Responsibility
Step 1
Campus Department
The department must determine if the Independent Contractor (payee) is a US Citizen or Permanent Resident Alien or Nonresident Alien by administering the Vendor Data Record (STD.204) form. All Independent Contractor(s) must already have in their possession a Social Security Number or an Individual Taxpayer Identification Number (ITIN). The department is responsible for administering the Vendor Data Record form.
A. If the payee indicates on the Vendor Data Record (STD.204) Form, Box 7 – Vendor Residency Status that he/she is a “US Citizen or
Permanent Resident Alien (“green card holder”)” for Federal tax purposes, the department will follow usual departmental and HRS & RM
employment practices/procedures.
B. If the payee indicates on the Vendor Data Record (STD.204) form, Box 7 – Vendor Residency Status that he/she is a “Nonresident Alien”
for Federal tax purposes, the department will provide the nonresident alien payee a “SFSU Foreign National Information Form”-- Each NRA Independent Contractor 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) from San Francisco State University.
C. Have the NRA Independent Contractor complete the rest of the required Independent Contractor (P156D) packet.
D. Set up an appointment for the NRA Independent Contractor to meet with the Tax Specialist in Internal Audit to discuss his/her tax residency
status, tax withholding requirements, and Federal tax treaty benefits.
E. Request the NRA Independent Contractor to bring the following required documents to his/her appointment with the Tax Specialist:
- Vendor Data Record (STD.204)
- SFSU Foreign National Information Form along with all the required
supporting documents stated on the Form:
1. Copy of Passport page showing picture, name, and number;In order to ensure that Internal Audit has all the information required to make the proper tax determination and to minimize any delays in analyzing, the department should inform the NRA Independent Contractor to be sure to bring all the documents and forms required.
2. Copy of U.S. Visa;
3. Copy of the I-94 Form “Arrival and Departure Record” (a small white card inside the passport);
4. Copy of FORM I-20 or IAP66; and
5. Copy of Social Security or Individual Taxpayer Identification Number (card).
Step 2
Internal Audit
At the meeting with the NRA Independent Contractor, the Tax Specialist will:
A. Review and discuss the SFSU Foreign National Information Form along with all the supporting documents. The Tax Specialist will determine
whether some or all of the compensation of the NRA Independent Contractor is exempt from income tax withholding under a federal income
tax treaty. California tax regulations do not mirror federal income tax treaties; therefore, California taxes will be withheld.
B. Stamp the Vendor Data Record (STD.204) form to indicate what percentage of Federal and State taxes should be withheld from the
payment(s).
C. Request the NRA Independent Contractor to return the Vendor Data Record (STD.204) to his/her department and complete any other
required forms requested by the department.
Step 3
Campus Department
The department will complete any other required forms, and forward the Vendor Data Record (STD.204), Requisition forms, and the Independent Contractor (P156D) packet to the Employment Unit of HRS & RM.
The procedures above are the necessary steps required to hire and pay a NRA Independent Contractor. The above procedures do not fully describe the entire process but do outline the necessary steps a department needs to adhere to. Should a campus department need further clarification on the above procedures or need additional information regarding paying a NRA Independent Contractor, they should contact Internal Audit and speak to Young Kim, Tax Specialist at (415) 338-2325.
Internal Audit developed these procedures in conjunction with the Employment Unit of HRS & RM.