GLACIER: USG’s Tool for Foreign

National Tax Compliance

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Presenters

• Doug Podoll• Georgia Tech• dougpodoll@gatech.edu

• Jessica Dunn – online• International Tax Compliance Specialist,

Georgia Tech• jessicadunn@gatech.edu

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Agenda• Introductions

• Name, Institution, Role: payments to foreign national• Your interests will drive the direction of the workshop

• Why• IRC 1441—all payments to NRAs must have withholding and be reported• Assist our guests, Audits, Right thing to do• Changes coming with Cohort 6 in OneUSG

• How• Equifax (I-9), People Soft, & GLACIER

• Case Studies• Your Questions

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Why: Assist our Guests

• F & J student status visitors to the US must file a completed 8843—first five calendar years

• J non-student status visitors to the US must file a completed 8843—first two years from entry

• & if they earned reportable income, they must file a personal nonresident tax return

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Case study

• Luc is an F-1 freshman from Trinidad and Tobago in the U.S. for the first time. He is receiving no scholarships and is not working on campus.

• What are CSU’s reporting obligations?

• What are Luc’s reporting obligations?

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Why: Audits

• It appears to have been years and years since last audits• Harvard, Wisconsin, UAB, GSU

• If it came, are you ready to have the auditor move in for 8 – 36 months and look back a minimum of three tax years? And can you define the status of every recipient of every payment as a US citizen, permanent resident, resident for tax purposes, or nonresident for tax purposes?

• Will they visit the SSC as well as one and/or all campuses?

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Why: “Do the Right Thing”

• Section 1441 of the IRC

• The I-9• Identifies the Foreign Nationals who must do GLACIER• Guidance on questions to ask

• Withholding agent liable for any tax not withheld as well as penalties and interest—in addition to the payee!

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Solution TeamController’s Office

Student Accts & Financial Aid

Payroll Office

Human Resources

Departments

International Office

Accounts Payable

Information Systems

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Miscellaneous Solution Issues

• Centralize• Avoid redundant data—a single data source and consistency in applying rules

• Equifax or other processing center for I-9s• Sunapsis—digital records

• Who’s the expert? How many folks can you afford to keep up-to-date in this area?

• How many offices do you want a visiting foreign scholar to have to visit?

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Working Through a Situation

•What is the payee’s U.S. tax residency status?•What type of payment is being made?•What is the “source” of the income?• Is the payment subject to tax withholding?• Is an income tax treaty exemption possible?

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Working Through a Situation

• At what rate should taxes be withheld?• Is the payment FICA tax exempt?• Is the payment reportable?• How should the payment be reported?• How should information about the payment be

maintained?

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Determine Status:

• NRA or Nonresident Alien is a tax status defined by the IRS.

• Foreign National Alien or FN is a wider umbrella defining the FNs on campus.

• An FN can be an NRA, but many will be Resident Alien (RA) for tax purposes.

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Resident Aliens

• U.S. citizen• “Green Card” test• Calculate an accurate

Substantial Presence Test (SPT)• But beware “exempt individuals”

• F & J students—5 years lifetime• J nonstudents—2 years of most recent 6 years

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Employment Eligibility Verification• Form I-9

• Section 14. An alien authorized to work until / /

(Alien # or Admission #) • You now have material evidence of nonresident status.• Who’s doing these forms and are they doing them correctly? Where are you

keeping the data?• If answer #4, then must enter them in GLACIER

• First Name & Last Name• Campus ID# & EE ID#• Email address

• NOW, not a few days or even weeks after they start working

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Default FN payroll entry pending GLACIER analysis

• Provide temporary SSN, if necessary• If FN without analysis

• Will determine OneUSG standard in next two months• NRA, Single, 1• Or• Single, 0

• Georgia G-4 same as W-4, other states Single, 0

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Limited to no help

• Banner: SPAPERS &/or GOAINTL• General Person Form

• Citizenship• A: Nonresident Alien• C: U.S. Citizen• R: Resident Alien

• Lacks complete history

• SEVIS• Limited to no reporting from SEVIS• Not enough information to determine tax status

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Solution Tool

GLACIERNonresident Alien Tax Compliance System:• USG license & pricing• Centralized data

collection and storage• Automatic analysis

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Solution Tool

Student Login page @ online-tax.net

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GLACIER and FN tax compliance

• USG negotiated license and cost• Annual license fee• Training cost each year• 1st time set up fee• Role of OneUSG and Shared Services Center now and in

future?

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GLACIER price list

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Case Study

• Luc is now a second semester freshman and he’s earning $200 a month working in the library.

• What are CSU's challenges?

• What are Luc’s responsibilities?

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Critical

• EVERY request for employment, payment, vendor, scholarship/fellowship, etc., must identify the recipient as a US citizen, US permanent resident or foreign national! Every single one!

• Please don’t use NRA when you mean foreign national (FN).

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PS Citizenship/passport coming 12/16

• Current State:

• Citizenship/Passport• *Country: USA

• Citizenship Status:

• Future State:

• Citizenship/Passport• *Citizenship Country:

(Default is USA)• US Status:• Date Entered• E-Verify Date

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PS Citizenship/passport coming 12/15• Current State• Country: USA• Citizenship Status:

• Native• Naturalized• Alien Permanent• Alien Temporary• Permanent Resident• Employment visa• Canadian Citizen• Other• Not Indicated

• Future State• Country: one of 256• Citizenship status:

• Foreign National Alien • US Lawful Permanent Resident• US Noncitizen National• Unknown

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PS Passport coming 12/16

• Current State:

• Passport Information• *Passport Number

• Expiration Date• Country• Comment

• Future State:

• Passport Information• *Passport Number

• Use Dummy PP #• Expiration Date• Country• Comment

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PS Visa permit coming 12/16

• Country: • 100% “USA”

• Type• Select from the US visa types on drop down menu• Updated list provided & data map

• Current visa list to Future State list (housekeeping)• Doug’s speech on team effort is coming

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Citizenship/Visa & Affiliates

• Affiliates: • USG Affiliates & Non-paid Affiliates• Necessary for Export Control, Research Security,

Background Checks, etc. • How do we gather the data?

• No I-9 and No GLACIER—GT working on Affiliate Personal Data Form

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Payment Types

• Student Aid - Scholarships and Fellowships • Prizes and Awards • Standard Payroll• Accounts Payable

• Independent contractors• Honoraria

• Royalties

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Student Aid for NRAs Scholarships/Fellowships• Qualified Scholarships

• Mandatory Tuition, Fees, & Books• 2001 no reporting or withholding requirements

• Prior to 2001 a reporting requirement• However, students must still have documentation

• Non-Qualified, Taxable Scholarships• Room & Board and other scholarships

• Report on a 1042-S and withhold 14% at time of award

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Student Aid for NRAs Treaty Benefits Available• Form W-8BEN For Audit File

• W-8BEN-E (entities)• W-8BEN ECI (effectively connected income)• FATCA (Foreign Acct Tax Compliance Act)

• Report on 1042-S• Beware of encumbered scholarships/sourcing issues

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Standard Payroll for NRAs No Treaty Benefits• Withholding on W-4

• Single • 1 Allowance • NRA hand written at #6 on dotted line• If not this way—employer must change to Single/0 (?)

• Reporting on W-2• Withholding exemptions for married NRAs and/or children from:

Canada, Mexico, India, Korea, & U.S. Nationals• Impact of Tax Cuts and Jobs Act of 2017 (loss of Personal Exemption)

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Standard Payroll for NRA’sTreaty Benefits Available• Form 8233 Required with Statement

• File with IRS for approval within 3 days of receipt• Report on 1042-S up to Treaty Maximum• Withhold Excess per W-4 - NRA• Report Excess on W-2• Beware of retroactive treaties• Question: Role of SSC vis-à-vis individual campuses

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GLACIER Tax Analysis/1

• GLACIER• Determines

• Tax residency of foreign nationals• Resident or Nonresident for tax purposes (RA/NRA)

• Federal income tax withholding requirements• FICA compliance• Tax treaty benefits—or not

• For: Payroll & Bursar & AP• Need to build bridge from GLACIER to PS

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GLACIER Tax Analysis/2

• GLACIER Tax Analysis• Review Employee Data entry

• If not complete, resend GLACIER email• If complete, review for accuracy of data entry,

immigration status, employment status, SSN, etc. • Complete status & update PS pages

• Citizenship/Visa & Federal/State Tax

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PS Federal Tax Page coming 12/16

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Field Current State Future State

FUTA Tax Status Exempt box is manual Exempt box is manual for Cohorts 1 - 5

EE Not Eligible for Tax Treaty Country: $STreaty ID: QKNA

Country: Actual CountryTreaty ID: No Treaty*Note: $S/QKNA still valid

Income Code PeopleSoft Code IRS Income Code

Eligible to Participate Manual update to check box Logic used to update check box; no longer visible

Field Current State Future State

FUTA Tax Status Exempt box is manual Exempt box is manual for Cohorts 1 - 5

EE Not Eligible for Tax Treaty Country: $STreaty ID: QKNA

Country: Actual CountryTreaty ID: No Treaty*Note: $S/QKNA still valid

Income Code PeopleSoft Code IRS Income Code

Eligible to Participate Manual update to check box Logic used to update check box; no longer visible

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NRA State Tax Page

• If an NRA for Tax Purposes• Uncheck the Resident box• Check the “Exempt from SUT” box• Update: GA same as Fed, other state Single/0

• Special Withholding Tax Status• Tax Marital Status• Withholding Allowances

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FICA on Job Data Page

• FICA field has three options• Exempt

• (NRAs and Students who meet IRS Exemption Criteria)• Medicare Only• Subject

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Security Access

• BOR Foreign National Immi Spcl• Citizenship/Visa panels

• Cannot change history, but may add rows• BOR Foreign National Tax Spcl

• Federal & State Tax Panels• May change history, add rows, etc.

• Jobs Panel—limited access only to edit FICA

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FICA Exemptions

• IRC 3121(b)(19)• The exemption from SS & Medicare tax which applies to

NRA students and scholars on F-1, J-1, M-1 & Q-1 visas. • IRC 3121 (b)(10)

• All full time students, whether citizens, permanent residents, residents, or NRAs.

• Beware break issues and ACA issues

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Applying for an SSN

• F & J students and scholars should be registered in SEVIS 48 hours before going to SSA (may not be completed until 30 days after start of term)

• Two letters required (& a job!)• All categories should be in U.S. at least 10 days before going

to SSA• Can put on payroll with dummy number, but may want to

place $50 in a holding account

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Case Study

• Ahmed is a Rotary scholarship recipient on a J-1 from Egypt. Columbus State provides a tuition waiver scholarship and the rest of tuition and fees are paid by Rotary. The Columbus Rotary club is also paying CSU for Ahmed to live in a residence hall.

• What’s happening with this one?

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NRA Independent Contractors/Honoraria Treaty Benefits Available

• Form 8233 Required with Statement• File with IRS for approval

• Report on 1042-S• Use the accountable plan rule for expenses

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NRA Independent Contractors/HonorariaNo Treaty Benefits

• Withhold at 30% • Report on 1042-S• Use your accountable plan rule for expenses (per Lowell

Hancock, 10.13.98)• http://www.irs.gov/Individuals/International-

Taxpayers/Nonresident-Aliens-and-the-Accountable-Plan-Rules

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B Visitors (all of whom are VIPs!)

• Honoraria• B-1, B-2, WB, and WT visa holders may be paid an

honoraria for “usual academic activity” not exceeding nine days in duration, provided that such individual has not received honoraria from more than five educational institutions in the previous six months.

• American Competitive Workforce Act of 1998

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• Travel and incidental expenses• B-1 & WB may be reimbursed for reasonable travel and

incidental expenses incurred in connection with a usual academic activity—no duration or activity limits.

• B-2 & WB may also be reimbursed BUT for no more then nine days duration as long as not more than five institutions in the previous six months!

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U.S. Income Sourcing Rules

• Compensation (Dependent & Independent)

• Scholarship/Fellowship (Non-Service)

• Royalty

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Case Study

• Professor Penetta is coming to Columbus State to spend a semester as the guest of the Chair of the History Department. She is a specialist in U.S. history at her home institution in Italy and she will do research on the Civil War. She will remain on salary from Italy and has a European Union fellowship to cover her expenses. Additionally, CSU will offer her office space, the use of a computer and access to the library.

• What are CSU’s reporting obligations?

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Case Study

• Professor Dr. Bagus is visiting his old friend at Columbus State to act as a judge at the annual music competition and to present a seminar on Gamelan music. The music school wishes to pay him a $3,000 honorarium to help him cover his expenses for travel and his five-day stay in Columbus.

• What are the issues in this case?

• What form will CSU issue Prof. Dr. Bagus?

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Applying for an ITIN

• Must have a required form to file to apply for an ITIN (8233, 1040NR, etc.) [students should not send tax forms with ITIN application]

• Need only the foreign passport to apply• Certified Acceptance Agent status not as helpful as before,

but still a good idea (Campus DSO/RO certification)• Application to IRS, return ITIN at time of applying for an SSN

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Certified Acceptance Agent• Certified Acceptance Agent

• Revenue Procedure 2006-10• Intended to assist NRAs with application for an Individual

Taxpayer Identification Number (ITIN)• Taxpayer Assistance Center (TAC) Locations Where In-Person

Document Review is Provided• Albany, Atlanta-Woodcock, Atlanta-Smyrna, Atlanta-Summit,

Augusta, Columbus, Macon, Rome, Savannah• https://www.irs.gov/help/tac-locations-where-in-person-

document-verification-is-provided

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Case Study

• Marie is an F-1 majoring in business. She is named the outstanding undergraduate business major at the end of the year and receives a $250 award.

• What are CSU's obligations?

• What are Marie’s obligations?

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End of year• 1042-S/1042

• Report compensation to an NRA employee exempt from income tax due to a tax treaty (TT)

• Income above TT reported on a W-2

• Report ALL scholarship and AP payments to NRAs—whether exempt due to a TT or not

• Shared Services Center role? 1042-S

Salary (TT)

Scholarship

AP Payment

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Who’d of Thunk? Tax Residency & …

• Health InsuranceNonresident aliens for tax purposes are not subject to the individual mandate within the ACA, but employer mandates are different.

• 1098-TsThere is no obligation to create a 1098-T for someone who is a nonresident alien for tax purposes (unless NRA requests one), but can you prove the student is an NRA?

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Affordable Care Act

• F/J status holders, who are NRAs, are exempt from the individual mandate

• J nonstudent much more complicated SPT exemption• Primary F/J, and dependents, must file form 8843 annually

• Dept of State rules for J-1 insurance quite different than ACA (deductibles & Ex/Re) (Alight role in enrollment without SSN)

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1098-Ts

• No further blanket waivers related to missing or inaccurate taxpayer identification numbers reported on 1098-Ts

• IRS will annually send out penalty notices for missing or inaccurate TINs

• See NACUBO Advisory Report 2014-1, Collecting Taxpayer Identification Numbers for Form 1098-T Reporting

• Request TINs at least annually and keep records

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Case Study

• Sam(antha) is a soccer player on a full scholarship. She is getting tuition, fees, $300 for books per semester and room and board in the residence halls. Sam transferred from a private high school in Florida and is from France.

• What are CSU’s obligations?

• What are Sam’s obligations?

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Where do you go for help?

• Aliens-L—NRA tax listserv• http://www.lsoft.com/scripts/wl.exe?SL1=ALIENS-

L&H=LISTSERV.UTK.EDU• Arctic International (www.arcticintl.com)

• GLACIER & Glacier Tax Prep• Nonresident Alien Tax Compliance: A Guide for Institutions

Making Payments to Foreign Students, Scholars, Employees, and Other International Visitors

• Nonresident Alien Tax Compliance: A Practical Approach to Income Tax Treaties

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Where do you go for help?

• NACUBO• International Resource Center (IRC)• eGroups and Listservs• Tax Forum & Global Operations Forum• The Tax Laws of Colleges & Universities, Bertrand M.

Harding, Jr. • NC State—FNTICC

• Foreign National Taxation & Immigration Compliance Conference (October 2016)—dominated by Tax Navigator

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Where do you go for help?

• Thomson Reuters Tax & Accounting (formerly Windstar: www.windstar.com)

• U.S. Tax Guides for Foreign Persons and Those Who Pay Them: B and J and other publications

• Visa Manager• Tax Navigator• Training programs• Listserv

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Where do our guests go for help?

• If NRA for tax purposes• Arctic Int’l, GLACIER Tax Prep• Sprintax—can do Georgia, & all other state, returns

• USG has a system-wide contract at big discounts for smaller institutions

• Thomson Reuters, Foreign Nat’l Tax Resource• NOT the IRS or any software designed for US persons,

e.g. Turbotax (changing now, but not ready yet)

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Questions?

It takes a team with perseverance!

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