2.12—Honorarium Payments

Effective: 08/23/2011
Senate Proposal: No
Responsible University Officer: Chief Financial Officer
Responsible Office: Controller

Policy Statement

Departments may pay an honorarium in return for a visitor’s participation in a University event or activity of short duration.


Policy Requirements

Once a visitor is invited to the University and it is the intent of the University to pay an honorarium, certain requirements are to be met for the following visitors.

U.S. Visitor

  • Visitor must not be an employee of Michigan Tech.
  • Visitor must have a Social Security Number.
  • Visitor is a U.S. Citizen or Resident Alien.

International Visitor

  • Visitor must not be an employee of Michigan Tech.
  • Visitor must have either a Social Security Number or Individual Taxpayer Identification Number.
  • Visitor is a Non-Resident Alien.
  • Honorarium activities can last no longer than nine days at any single institution or organization and the international visitor will not have accepted such payments from more than five institutions over the last six months.

Reason for Policy

This policy was developed to ensure compliance with 1099-MISC tax reporting requirements and compliance with the American Competitiveness and Workforce Improvement Act of 1998 (ACWIA).

Related Policy Information

Honorarium payments are reported to the U.S. Department of Treasury Internal Revenue Service and visitors must have either a U.S. Social Security Number (SSN) or an Individual Taxpayer Identification Number (ITIN). For visitors who do not have either of these, they will not receive payment until they apply for and receive a number. This could take between 4-6 weeks.

Honorarium payments generally are not charged to federally sponsored projects, unless a contract or grant specifically authorizes such payments.

If travel expenses are to be reimbursed to the visitor receiving an honorarium, a travel expense voucher should be processed.

For international visitors, 30% of the total payment may be withheld as income tax if their home country does not have a tax treaty with the United States. The 30% withholding requirement is dependent upon the existence of a tax treaty exemption.

Exclusions

When an agreed upon amount exists between a visitor providing the service and the University, this constitutes a contractual agreement and must be processed on a purchase order as professional services, and they can not receive a honorarium payment.

Contacts

Office/Unit Name Telephone Number
Tax Accountant 906-487-2449
General & Auxiliary Accounting 906-487-2242

Definitions

Honorarium — A payment to a University visitor in recognition of outstanding achievement or expertise in return for their participation in a University event or activity of short duration. The amount of the honorarium is not commensurate with the service provided and there is no expectation of payment by the visitor.

U.S. Visitor — An individual who is not an employee of Michigan Tech, has a Social Security Number, and is a U.S. Citizen or REsident Alien.

International Visitor — An individual who is in business or tourist status (holds a current B-1, B-2, WB, or WT Visa type); not an employee of Michigan Tech, is a Non-Resident Alien, ensures they have not accepted such payments from more than five institutions over the last six months; and has either a U.S. Social Security Number (SSN) or an Individual Taxpayer Identification Number (ITIN).

Responsibilities

Requesting Department

  • Honorarium to U.S. Visitors - Makes arrangements with the individual regarding the event, confirms the person has a Social Security Number and submits a check request and U.S. Visitor Honorarium Information Form to Accounting at least two weeks prior to needing the payment.
  • Honorarium to International Visitors - Sends a completed Request for Honorarium Payment for International Visitor form to the tax accountant a minimum of two (2) weeks in advance of visit; makes arrangements with the visitor regarding the event; and submits a check request to Accounting at least two (2) weeks prior to needing the payment.

International Visitor — Provides information to the Requesting Department for the International Honorarium Request Form; provides passport and I-94/Departure Card; and completes the Compliance Statement for International Honorarium Payments upon arrival.

Tax Accountant — Reviews the International Honorarium Request Form; reviews the international visitor's passport and I-94/Departure Card for either a "B-1", "B-2", "WB", or "WT"; confirms the name on the passport matches the name on the I-94 card; reviews the Compliance Statement for International Honorarium Payments with the international visitor upon arrival; determines any tax withholding on payment (if applicable), and issues applicable tax forms.

Accounting — Reviews the check request and honorarium form to ensure the required information is provided. Processes the payment as requested by the department.

Procedures

In support of this policy, the following procedures are included:

Forms and Instructions

In support of this policy, the following forms/instructions are included:


Adoption Date

08/23/2011 Approved by Chief Financial Officer

Revisions

04/10/2017 Transfer of policy page from HTML to CMS. Business and Finance numbers renamed from "2.2000" to "2. Business and Finance". Specifically from "2.2012—Honorarium Payments" to "2.12—Honorarium Payments".