Print/Copy Mail Services Vice President FA
 |
Independent Contractors can include but are not limited to Consultants, Entertainers, Guest Speakers, Visiting Experts, Individuals and Companies. The IRS has regulations and rules that determine the relationship between the U of O and an individual who is performing work on our behalf. The relationship is either one of employer-employee or the individual is performing a service as an independent contractor. The IRS lists characteristics that are considered when a judgment is made about which relationship exists, employee or independent contractor. Sometimes it is not easy to tell whether an individual is performing work as an employee or as an independent contractor. There are potential tax issues if the IRS determines that the UO makes an incorrect determination about the relationship. The penalties can be substantial as well. If you are unsure about making this determination, check with Purchasing and Contracting Services.
In the view of the IRS, one of the characteristics of an independent contractor is that s/he pays all travel/misc expenses directly. Lump sum (flat fee) clearly supports the independent contractor classification. Reimbursing the independent contractor or paying a vendor directly for travel/misc expenses may weaken the rationale for independent contractor classification.
There are also issues concerning non-resident aliens. It is critical that departments make sure that a proper visa is available before inviting an international scholar to campus. This could affect our ability to pay honorariums or other forms of reimbursements.Payment Process for International Visitors
Four options are listed below. The first is recommended. The other options may be used only when the evidence for independent contractor status is clear or when the requirement for the independent contractor to pay his/her expenses directly is detrimental to the UO department contracting for the services.
1. LUMP SUM FEE/preferred method
The travel/misc expenses will be paid by the independent contractor.
They will charge you a fee for their services and it is paid using the
Personal/Professional Services Contract form (PPSC). No receipts are
required and should not be retained by the Department. The total amount
will be reported on a 1099 at the end of the calendar year.
2. FEE PLUS EXPENSES-paid by contractor & reimb by U of O
An independent contractor will pay their travel/misc expenses personally
and then apply for travel reimbursement after the trip is complete.
The PPSC that you negotiate with the contractor should state that travel/misc
expenses will be reimbursed separately. In order to comply with our
accountable plan for travel, the following guidelines must be followed.
Their tickets will be paid for with their credit card or a personal check. First class airfare or train fare is not an allowable expense and will not be reimbursed. If they want to travel first class you should use the lump sum method described above. They should be told that the U of O can only reimburse for the lowest coach fare available at the time. Original receipt is required for reimbursement.
The independent contractors credit card or personal check will be used to hold the room. Reimbursement for lodging is limited to our per diem.
Telephone calls home are considered to be a personal expense and cannot be reimbursed. Business phone calls may be included if they are applicable to U of O business. Receipts are required for calls over $25.00.
Meals will be paid at the allowed per diem and only meals that have not been hosted or furnished by someone else.
Reimbursement is not allowed for hotel room movies, laundry services, tips or alcoholic beverages. These are considered a personal expense.
Travel reimbursement must be completed with the independent contractors original signature. A copy of the PSC must be attached to all payments.
3. FEE/ PLUS TRAVEL EXPENSES-travel paid up front by U of
O
The PPSC that you negotiate with the contractor should state that
travel/misc expenses will be paid separately.
You will purchase their airfare for them. (copy of PSC must be attached)
PLEASE NOTE: You cannot use the city pair contract for independent contractor travel (per city pair contract language).
You should also collect the original passenger receipt coupon from the traveler. This should be attached to the travel reimbursement that is submitted for any other expenses that you need to reimburse to the contractor. If there wont be a travel reimbursement it should be kept with your department files.
Lodging arrangements can be made and paid for by your department up to the allowable per diem.
The lodging establishment should be asked to bill your department for room and tax only.
If it is a bed and breakfast you can pay up to lodging per diem plus breakfast. But remember....you cannot reimburse them for breakfast if it is included in the lodging bill.
Meals will be paid at the current per diem rate and only meals that have not been hosted by someone else. These will have to be reimbursed using a travel reimbursement form.
A copy of the PSC should be attached to all payments or reimbursements.
Misc. expenses, i.e. taxis, phones, etc. may also be reimbursed. Travel reimbursement must be completed with the independent contractors original signature.
4. TRAVEL EXPENSES ONLY paid by contractor and reimb by UO
No PPSC Completed
If the independent contractor is not charging a fee for their services, you will not have a PPSC. The contractor will pay their travel expenses personally and apply for reimbursement. You will process a travel reimbursement as described in method 2.
Paid up front by U of O
Method 3 will be used to pay for airfare/train and lodging. You will not have a PPSC. A travel reimbursement may be needed for any meals or miscellaneous charges that they incur.
