BUSINESS VISITORS TO VANDERBILT

(Immigration & Taxation Concerns)

Dahlia M. French, Esq. Director Alicia Dinoso-Sharpnack, Sr. Int’l

Tax AdvisorElizabeth Shadbolt, Int’l Tax

Advisor

VISIT RESPONSIBILITIESIn August 2009, the Office of International Services (OIS) and

the International Tax Office (ITO) joined and a few months later adopted the acronym “VISIT” (Vanderbilt International Services & International Tax).

VISIT is responsible for all employment and business immigration services and international tax determinations at Vanderbilt. This includes assisting international business visitors with immigration matters and ensuring payments to visitors (and certain international vendors) are properly taxed.

The international tax and immigration teams maintain separate functions but there are increased sharing and cross-responsibilities. The core of international tax duties remain with the international tax team but the immigration advisors can provide initial Glacier assistance.

BUSINESS VISITOR QUESTIONNAIRE (BVQ)

With an continued focus on automating and simplifying immigration and international tax process, VISIT updated it website, increased the amount of information available through self-services and created questionnaires that can be submitted online.

The BVQ is available at http://www.vanderbilt.edu/visit/enews/questionnaire.php. It should be completed by all international visitors to Vanderbilt regardless of whether they are receiving a payment.

The BVQ should be completed thirty days before the business visitor arrives in the USA.

BVQ (CONT’D)

Why is the BVQ important?

Allows VISIT to capture the necessary information to determine the taxation on any taxable payment to the business visitor.

Allows VISIT to prepare a Letter of Invitation that can be used to obtain a B-1 or B-2 visa from a US Consulate

Letter of Invitation can also be used a US Customs & Border Protection (CBP) to allow visitor to enter the USA. (This is important for visitors traveling in Visa Waiver status)

Letter of Invitation is not the same as letter provided by the department. VISIT’s letter contains the necessary immigration language that both the consulate and US Customs need to understand the purpose of the visit and the immigration regulation permitting a business visit of this nature.

BVQ (CONT’D)

Once the BVQ is submitted it goes to the VISIT groupmail box and an advisor begins working on the process. An immigration advisor will send a Letters of Invitation; normally within 48 hours. An international tax advisor will create the Glacier record and send the necessary tax documents to the business visitor for signature and return.

Visitor then sends copies of immigration documents by e-mail or fax. Needed documents include:

Visa waiver visitors: Passport data page ESTA approval Visa waiver visitors will not have an I-94

Canadian citizen visitors: Passport data page Canadian visitors will not have ESTA approval or an I-94

Other international visitors: Passport data page Visa stamp I-94 Letter giving permission to accept payment (J-1 visitors)

CHECK REQUEST (CR) PROCESS

Check Requests (CR) are always sent to Disbursements first. Include all receipts and evidence of the business purpose of the visit (invited speaker, conference, etc.).

No immigration documents are needed since that information has already been given to VISIT through the BVQ process.

Disbursements will send all CR related to business visitors to VISIT for an international tax review.

If VISIT already has a BVQ, Glacier record and signed Glacier documents from visitor, we can quickly complete our analysis and return the CR to the appropriate check issuance site (Disbursements, HR Processing or Medical Center Demand Check)

VISIT’S CHECK REQUEST LOG

In the interest of transparency, VISIT now post CR information on the website. The Check Request Log is updated each Friday and can be viewed at http://www.vanderbilt.edu/visit/enews/check-request-log-01-12--2011.pdf.

Check Request Log page is also accessible from the “Quick Links” menu bar on the VISIT homepage (www.vanderbilt.edu/visit).

CR Log shows: CR number Payment amount Date received by VISIT Date forwarded by VISIT for check issuance Receiving Office Comments

Links to Receiving Offices are also provided for additional assistance & updates

INCOME TAX TREATIES

The USA has income tax treaties with various foreign countries. Under these treaties, residents of foreign countries are taxed at a reduced rate, or are exempt from U.S. income taxes on certain types of US source income. These reduced rates and exemptions vary among countries and specific items of income.

If the treaty does not cover a particular kind of income, or if there is no treaty between the USA and a particular foreign country, residents or citizens of that foreign country pay taxes on US income.

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TAX TREATIES, CONT’D

• An individual must have an Individual Taxpayer Identification Number (ITIN) or Social Security Number (SSN) to apply for a tax treaty benefit.

• VISIT will advise on the availability of a tax treaty when the Glacier record is created and send the completed tax treaty documents to the business visitor by e-mail. The visitor needs to simply review, sign and date the documents and return them to VISIT.

• Vanderbilt is responsible for sending the tax treaty forms to the IRS so we cannot apply the tax treaty benefits until these forms are signed and returned to our office.

• Alternatively, the visitor can claim benefits at the time of tax filing by submitting Form 8233 with the tax filing itself (1040-NR). Normally occurs when the visitor failed to complete Form 8233 and taxes were withheld but now wants a refund of income taxes withheld.

PERSONAL DAILY WITHHOLDING ALLOWANCEIRS allows for a $10.14 daily exemption for

each day of physical presence in the USA.

All business visitors receiving payment for independent personal services (honorariums, speaker fees, etc.) can claim the personal daily withholding allowance.

Allowance reduces the taxation on the payment and reduces the “gross up” amount should the department want to gross up.

TAX REPORTING OF PAYMENTS

Income, taxable and exempt per a treaty benefit, and the taxes withheld, are reported to the IRS on Form 1042-S.

The 1042-S form is available electronically via Glacier by March 15 of the following tax year; The W-2 is mailed to individuals by January 31 of the following tax year.

VISIT will look for all legal avenues to reduce taxation (tax treaties, personal daily withholding allowance, etc.) but some payments are simply taxable.

Certain payments to business visitors are considered legitimate business expenses and these payments are not considered income. They are not taxable. Examples include:

Travel expenses for an invited speaker Incidental expenses for an invited speaker Travel and incidental expenses for persons attending a conference or other

event are taxable unless the visitor is an invited participant providing a service at the event

QUESTIONS?