WVU-CO-16 Payments to Foreign Vendors & Foreign Independent Contractors Policy

West Virginia University Policy
Division of Administration and Finance
WVU-CO-16

PAYMENTS TO FOREIGN VENDORS &
FOREIGN INDEPENDENT CONTRACTORS POLICY

PURPOSE

The purpose of this policy is to state what percentage of taxes will be withheld on payments made to foreign vendors for services rendered.

SCOPE

This policy applies to all foreign vendors and foreign independent contractors who work in association with West Virginia University, including those on the regional campuses.

POLICY

West Virginia University will withhold taxes at a 30% rate on payments made to foreign vendors that represent service payments, interest, dividends, rents, premiums, annuities, compensation, and any other fixed determinable annual or periodic gains, profits, and income, unless an income tax treaty operates to exempt the income.

In most situations, payments made to foreign vendors for goods or reimbursements for business travel or living expenses will not be subject to tax withholding or reporting obligations.

The general rule is that 30% must be withheld from payments for services unless an income tax treaty operates to exempt the income. The foreign vendor individual who wishes to claim a withholding exemption based on a tax treaty must complete and return, annually, to WVU Form 8233, Exemption From Withholding on Compensation for Independent Personal Services of a Nonresident Alien Individual. Without receipt of this form before the payment is made, and without an appropriate Federal Employer Identification Number (FEIN) or a valid Individual Taxpayer Identification Number (ITIN), the withholding exemption cannot be allowed, and 30% must be withheld.

PROCEDURE

Procedure development rests with the Controller’s Office – Tax Accounting.

RESPONSIBILITY FOR IMPLEMENTATION

The responsibility for implementation of this policy rests with the Controller’s Office – Tax Accounting in cooperation with Procurement Services.

RESPONSIBILITY FOR INTERPRETATION

The responsibility for interpretation of this policy rests with the Controller, West Virginia University.

Effective Date: September 10, 1998
Approved By: Scott C. Kelley, Vice President