Nonresident Alien Tax (NRAT) Overview
Introduction
All citizens or residents of another country living, visiting, working, or studying in the U.S. are responsible for compliance with United States laws and regulations
Under federal law, employers such as universities are responsible for various nonresident alien program requirements. In the CSU Technical Letter HR/Salary 2003-7, issued August 18, 2003, the CSU affirmed, that, “Regulations and reporting requirements applicable to individuals with nonresident alien tax status are numerous and complex. Campuses are responsible for ensuring nonresident alien tax compliance requirements are met, regardless of how a payment is generated. In addition to wages and other forms of compensation paid through the state payroll system, other payment sources such as for scholarships, fellowships, consultant payments, prizes, awards, speaker fees, royalties and commissions, are affected.”
Sonoma State University complies with all applicable laws and may be required to withhold Federal and California State tax from noncitizens and file appropriate reports with the Internal Revenue Service and the Franchise Tax Board.
The most frequent payee issues regarding payments to noncitizens are briefly described below.
Payments to Noncitizens
Employees - All citizen and noncitizen employees of the University are signed up by Human Services and must provide documentation that demonstrate identity and eligibility to work in the United States to meet legal requirements of the Immigration and Reform Control Act of 1986.
Independent Contractors, Performers, Scholars, etc. - It is assumed that such noncitizen persons are on campus only for a short duration. The respective campus department must forward copies of the 204 Form Vendor/Payee Data Record and the Alien Information Collection Form to the Internal Auditor for review prior to the hiring of such persons. Completion of the Information Form is used to help determine the residency status of a potential payee, and possible Federal and State income tax withholding rates. Additional documentation may be necessary to complete the process before payment can be authorized.
The internal auditor serves as the team leader/coordinator to ensure University compliance with nonresident alien documentation and taxation. The nonresident alien tax team consisting of representatives from Payroll, Accounts Payable, Student Finance and International Services seeks to ensure that potential nonresident alien questions are identified and addressed. Compliance issues or reporting problems for nonresident aliens are referred to the coordinator for resolution.
Questions regarding payments to noncitizens such as scholarships, prizes, awards may be reviewed with the Office of Internal Audit Services.
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