Nonresident Alien Taxation
Alien Taxation
and Forms
and Other Resources
Making Payments to Nonresident Aliens
(NRA)
Stipend
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 to Stipend 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 Record (STD.204) form.
A. Administer the Vendor Data Record (STD. 204) form (required by Accounts Payable before any payment can be processed). The form is available online at: http://fiscaff.sfsu.edu/Reference/Public/Forms/STDT%20204.pdf.
B. 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 or project director will follow usual departmental and Accounts Payable payment procedures.
C. If the payee indicates or provides information 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 or project director will:
1. Provide and request the nonresident alien to complete a “SFSU Foreign National Information Form”-- All nonresident alien 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).
2. Instruct the nonresident alien payee to schedule a meeting with the Tax Specialist in Internal Audit 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 Foreign National Information Form along with all the required supporting documents stated on the form;
• Stipend payment authorization form; and
• Vendor Data Record (STD.204) Form.
NOTE: If the Nonresident Alien is a current employee of San Francisco State University, the department or project director will follow usual Human Resources Safety & Risk Management practices/ procedures – Practice Directive P301 Honorarium.
Step 2
Internal Audit
At the meeting with the NRA payee, the Tax Specialist will:
A. Review and discuss the SFSU Foreign National Information Form along with all the supporting documents; the nonresident alien payee’s tax residency status; the applicable income tax withholding rate; and whether some or all of the stipend payment is exempt from income tax withholding under a federal income tax treaty.
B. Prepare all required forms (e.g. SFSU, federal, state forms) which require the signature of the payee.
C. Stamp the Vendor Data Record (STD.204) Form and indicate the appropriate Federal and State tax withholding information. The stamp also indicates that Internal Audit has discussed Federal and State tax withholding rates with the nonresident alien employee.
D. Request the nonresident alien payee to bring the stamped Vendor Data Record (STD.204) and Stipend Payment Authorization forms back to the campus department or project director.
Step 3
Campus Department or Project Director
The campus department or project director will:
A. For a non-SFSU student NRA payee – forward the Vendor Data Record (STD.204) and Stipend Payment Authorization forms to Accounts Payable.
B. For a SFSU student NRA payee – forward the Vendor Data Record (STD.204) and 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 Programs Accounts - All forms - Vendor Data Record (STD.204) and Stipend Payment Authorization forms must be returned to ORSP, who in turn will forward the forms to the appropriate department for processing - Accounts Payable and/or OSFA (see above step 3A or 3B).
As a reminder the Office of Research and Sponsored Programs (ORSP) must authorize all payment requests for stipends chargeable to ORSP accounts PRIOR to the activity or event taking place.
NOTE: If the above procedures cannot be followed and/or the required information cannot be obtained due to time constraints or other reasons, the campus department or project director must obtain as much information and documents from the NRA payee as possible and forward them to the Tax Specialist in Internal Audit
The Tax Specialist will coordinate payment processing with Accounts Payable and/or OSFA to ensure that proper Federal and State income tax is withheld. Since the NRA payee is unable to complete all necessary Federal, State and CSU forms, the payment must be taxed appropriately.
The procedures above are the steps needed to make a payment to an NRA stipend recipient. 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 recipients, they should contact Internal Audit and speak to Young Kim, Tax Specialist at (415) 338-2325.