To: Deans, Directors and Department Chairs, MOU Financial Leads, Business Managers,Research Administration Support Group (RASG), Finance Staff
From: Beau Jimmerson, Executive Director of Strategic Sourcing and Payment Services
UNC-Chapel Hill has often contracted with non-resident aliens for independent personal services performed for the University via an Independent Contractor (IC) agreement.
As such, these workers are subject to special federal and state income tax withholding and employment eligibility verification requirements. These requirements are similar to those of non-resident alien employees paid via payroll.
To ensure that the University complies with the standards and regulations set forth by the IRS, NC Department of Revenue and the US Department of State, we have updated several related documents to standardize our process of reporting these items:
- Policy 709, Federal and State Tax Withholding Requirements for Payments to Non-Resident Aliens Performing Services in the United States
(formerly Payroll Services Policy 1118, Foreign National Independent Contractors)
- Procedure 709.1, Completing Tax Withholding Forms as a Non-Resident Alien Performing Services in the United States
(formerly Payroll Services Procedure 1118.1, Completing Tax Withholding Forms as a Foreign National Independent Contractor)
- Form 709.1.1f, Foreign Vendor Withholding Assessment (new)
Effective immediately, all non-resident alien independent contractors (IC) who are paid honorariums or compensated for services performed in the United States (other than employee wages) will be required to fill out forms outlined in the above policy and procedure.
Because foreign independent contractors performing services in the U.S. under certain visa types are restricted to the number of engagements they can perform in the U.S. during a period of time, it is essential that these contractors are reviewed and approved before employment to ensure that UNC is allowed to pay them.
Please be advised that additional processing time will be necessary to review these forms. Please allow an additional two weeks for IC approval (assuming documentation is complete) and an additional week for payment processing when establishing a non-resident independent contractor. Salaried non-resident aliens who are paid through payroll are not subject to this paperwork.
Thanks in advance for your adherence to these updated documents. Questions can be emailed to disbursementsteam@unc.edu.