Subject: Payments to Noncitizens of the United States
Effective 1/1/2024
Introduction
United States tax law requires entities to consider withholding federal and applicable state income taxes from all payments made to noncitizens of the United States excluding travel reimbursements and also to report such information to the Internal Revenue Service (IRS). The complex laws that pertain to payments made to nonresident aliens require that entities identify noncitizens and determine whether the noncitizen is a tax resident or nonresident alien.
The purpose of this APL is to document procedures to aid the University of Maine System (University) in complying with withholding and reporting requirements.
Procedures
Effective January 1, 2024, when processing a payment to a noncitizen, including for employment, independent contractor services, fellowships, scholarships, and travel expenses, the following procedures must be followed.
Sprintax
The University has engaged Sprintax Calculus, a third-party administrator, to determine nonresident or resident status for federal tax purposes. The University provides access to Sprintax for noncitizens to use at no cost to determine federal tax status, and to complete any other federal tax form(s) applicable to their personal situation. Sprintax is a secure tax preparation software.
Type of Payments
Independent Contractor Services, Service Providers
The following forms should be completed by independent contractors/service providers, where applicable, and submitted to the UMS Office of Strategic Procurement, 5761 Keyo Building, Orono, ME 04469-5761, faxed to (207) 581-2698, or emailed to: umsvendor@maine.edu
- Form W-8BEN-E Certificate of Status of Beneficial Owner for United States Tax Withholding and Reporting (Entities), is required from nonresident entities/companies.
- A current Form W-8BEN Certificate of Foreign Status of Beneficial Owner for United States Tax Withholding and Reporting (Individuals), is required from nonresident individuals.
- Generally, withholding is required for services performed in the United States. If individual Non-Resident Alien Service Providers qualify for treaty benefits a current Form 8233 Exemption From Withholding on Compensation for Independent (and Certain Dependent) Personal Services of a Nonresident Alien Individual, including a US Taxpayer Identifying Number, is required.
Travel Expenses
Reimbursement to noncitizen independent contractors for travel expenses are not taxable provided documentation exists to substantiate the reimbursement. The Foreign National Information Form need not be completed for these types of payments. Payments made to nonresident alien Independent Contractors that include payment for both independent contracted services and travel reimbursement should be treated as two separate payments.
Scholarships
Each semester, the University of Maine System Accounting Department (Accounting) will identify noncitizens in the student information system who have received a taxable scholarship. Accounting will coordinate with the International Programs Office or person at each campus to ensure the appropriate IRS forms are completed and tax withheld, if necessary.
Employment
All requests for payments to noncitizens for employment require that the noncitizen go through Sprintax to determine nonresident or resident status for employment tax purposes. Sprintax will determine eligibility for exemption of income from taxation through a tax treaty and will determine the appropriate IRS forms that need to be completed and signed by the noncitizen. Once the Sprintax process has been properly completed, the noncitizen will be eligible for payment.
A U.S. Social Security Number (SSN) is required for employment purposes. If the SSN is not provided in Sprintax, individuals will be required to upload a copy of their Application for a U.S Social Security Number. When the SSN is received, it must be updated in Sprintax. If a SSN is not provided within 30 days, employees will be asked to stop working until the SSN is updated.
Assistance
Questions related to scholarships, travel expenses and independent contractor payments for services should be directed to the Assistant Director of Accounting at 207-262-7935. Questions related to employment and/or tax treaties should be directed to the Payroll office at 207-973-3320.
Resources and Attachments
A helpful IRS website containing information about various IRS laws surrounding nonresident aliens.
Attachment I Guide to Sprintax (Word)
The Guide to Sprintax provides student and employee instructions and must be followed as prescribed in this APL.
Attachment II University Tax Treaties (Word)
A listing of tax treaties available to employees and/or students of the University.
Approved: Chief Financial Officer and Treasurer