Foreign Visitor Tax Guide: Section Five

Section Five: Short Term Visitors

5.1 Immigration Law Restrictions
In past years, immigration and tax law restrictions were rather loosely interpreted by many colleges and universities; however, the IRS and the Bureau of Citizenship and Immigration Services have recently undertaken stricter enforcement measures. This may impact on those who are hosting foreign faculty, scholars, researchers, performers, artists, or those performing other services. However, these restrictions should not discourage anyone from inviting foreign visitors to ASU for short-term stays. In most cases, it is possible to legally reimburse them for expenses (such as accommodations and travel) and/or pay them for services performed for ASU, provided that the foreign national holds the proper status, typically J-1. ASU faculty members who travel abroad, and who may extend an invitation to a foreign colleague, should be aware that for some countries it may take several months to obtain the proper visa, and that the visa does not guarantee entry. (see Section 1.7).

In order to ensure that (a) foreign visitors can receive the appropriate payments, (b) they are not denied entry into the U.S., (c) they do not have more taxes withheld than are necessary, and (d) hosting departments are not assessed fines by the IRS or the BCIS, faculty members who plan to host foreign nationals should have their departmental payroll clerk or account manager contact the ASU Office of International Programs (for non-student visitors) or the ASU International Student Office (for students) prior to making any contractual arrangement to pay or reimburse a foreign national invited to ASU.

5.2 B-1 and B2 Visas
5.2.1 B1 Visitor for Business
Foreign visitors present in the U.S. in B1 status are prohibited from being paid a salary, wage, or other form of compensation for services rendered from a U.S. source. The only types of payments that a B1 may receive while in the U.S. are as follows:

• Reimbursement for expenses including accommodations, meals, and travel expenses. Payments may be made directly or to the provider of the service (subject to ASU Travel Policy restrictions).
• Scholarship or fellowship grants where the visitor is enrolled in a course of study and renders no services for the university (subject to restrictions imposed by the Fellowship Office).
• Prizes and awards.

See Section 5.3 below for limited exception.

5.2.2 B2 Visitor for Tourism
Foreign visitors in the U.S. in B-2 status are prohibited from receiving compensation of any kind. Payments made on behalf of the visitor for things such as lodging or transportation may be allowed, depending upon their source, i.e., per diem paid by a foreign source is acceptable.

See Section 5.3 below for limited exception.

5.2.3 Visa Waiver for Business (VWB) and Tourism (VWT)
The U.S. waives tourist visas for citizens of certain countries, such as Canada and nations who are members of the European Economic Community. However, under U. S. Immigration laws, the legal status of foreign nationals who are in the U.S. under Visa Waivers for Business (VWB) and Visa Waivers for Tourism (VWT) is identical to those holding the actual "B" visas. In other words, VWBs, like B-1s, can only receive expense reimbursements, prizes, scholarships, or fellowships. VWTs or B-2s cannot receive compensation payments of any kind.

5.3 Limited Exception to B1 and B2 Visa Holders
A limited exemption applies to foreign visitors to Colleges and Universities temporarily in the U.S.

B-1, B-2, WB and WT visa holders may be paid an honorarium 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-month period.

B-1 and WB visa holders may be reimbursed for reasonable travel and/or incidental expenses incurred in connection with a University activity, regardless of the duration of the University activity and regardless of whether the individual has previously received payment from other educational institutions.

B-2 and WT visa holders may be reimbursed for reasonable travel and/or incidental expenses incurred in connection with usual academic activity not exceeding nine days in duration, provided that such individual has not received travel from more than five educational institutions in the previous six-month period.

The individual must fill out and sign a compliance statement stipulating that these conditions have been met. (See Appendix 4)

Immigration regulations for the limited exception for B1 and B2 Visa holders have not been issued. Some experts have questioned whether the exception granted in the 1998 Law applies to WT and WB individuals. Along with many other institutions of higher education ASU will allow the application of this limited exemption to payments to WT and WB guest lecturers.

5.4 J-1 Short -Term Scholars
5.4.1 Possible Sources of U.S. Income
J-1 Non-students (professors and researchers) May be employed on campus in activities related to their program objective. Permission for off-campus employment must be approved in advance by International Programs and may be granted only for participation in occasional lectures or short-term consultations.

5.4.2 Tax Implications
Refer to Sections 2.4 2.6 of this guide to determine whether federal income tax, FICA tax, and/or state and local income tax apply to the type of payments being made to the foreign national.

5.5 Income Tax Withholding
In general, all income paid by the university to a foreign national is taxable unless the income is exempt from tax under the provisions of a tax treaty between the U.S. and the person's country of residence, under a provision of the Internal Revenue Code, or pursuant to a determination by the Assistant Director for Tax that the income is not U.S. sourced income. The university is required by law to withhold taxes from these payments at the following rates, unless the income is specifically exempt.

• Employee wages: taxed at graduated income rates
• Fellowship & Scholarship: 14% income tax
• Independent Contractor payments: 30% income tax