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Financial Policies Training: Payments to Individuals for Services (2.3.1) Effective Date: January 1, 2009.

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Presentation on theme: "Financial Policies Training: Payments to Individuals for Services (2.3.1) Effective Date: January 1, 2009."— Presentation transcript:

1 Financial Policies Training: Payments to Individuals for Services (2.3.1) Effective Date: January 1, 2009

2 These PowerPoint slides are intended for training purposes. In the event of any discrepancy or interpretation difference between the policy and the slides, the policy dictates.

3 Methods for Retaining Individuals for Services Conditions for Each Method Procedures for Each Method Retaining Employees (Current/Former/Student) for Services Payment to Independent Contractors Agenda

4 Ways to engage individuals (other than volunteers) to provide services: As an EMPLOYEE Of the university Of a payrolling/temp agency As an INDEPENDENT CONTRACTOR Under a Personal Services Contract Under a Limited Services Engagement Form Methods for Retaining Individuals for Services

5 Who decides the proper method? Policy guidelines for org units Policy – final authority are responsible offices (i.e., Tax Compliance, HR, Purchasing, Accounts Payable) Methods for Retaining Individuals for Services

6 If ANY of the following conditions are met: UC job description describes the work UC provides supervision, equipment Org unit controls work hours Org unit is responsible for discipline Services are (or would normally be) performed by a UC employee Conditions for Retaining an Individual as an EMPLOYEE of the University

7 To hire an employee of the university Consult Human Resources policies Contact Human Resources for assistance Procedures for Retaining an Individual as an EMPLOYEE of the University

8 If ALL of the following conditions are met: University pays through the agency Services are under UC supervision Individual does not use own methods in providing services Services are (or could be) performed by UC employees Services are interim while recruiting to fill a vacancy Conditions for Retaining an Individual as an EMPLOYEE of a Payrolling/Temp Agency

9 To engage a payrolling or temporary agency Contact UC’s Central Purchasing A purchase order or term contract is required Which type of agency should be used? Payrolling agency: when UC chooses the individual Temporary agency: for hourly-paid positions when the agency chooses the individual Procedures for Retaining an Individual as an EMPLOYEE of a Payrolling/Temp Agency

10 If ALL of the following conditions are met: University will pay the individual as an individual Contractor determines own methods for providing the services Services are not (or normally would not be) performed by a UC employee Services are not interim while recruiting to fill a vacancy Services Over the duration of up to a year will not exceed the current university threshold ($20,000) Note: a new contract with the same contractor in a second year is allowed (maximum of up to 5 consecutive contracts) Conditions for Retaining an Individual as an INDEPENDENT CONTRACTOR Under a Personal Services Contract

11 Org unit completes forms; obtains independent contractor’s signature(s) and org unit approving signature(s) Personal Services Contract Contractor Status Questionnaire Foreign Visitor Supplement (if needed) Org unit forwards forms for additional signature, if required VP or designee approval if over $5,000 Some VP offices have lower dollar-amount thresholds Org unit forwards all forms to Director, Tax Compliance (serves as Contracting Officer designee) Signed contract is returned to originated org unit; copy to General Counsel Note: contract must be fully executed by both parties before services are performed Procedures for Retaining an Individual as an INDEPENDENT CONTRACTOR Under a Personal Services Contract

12 If ALL of the following conditions are met: University will pay the individual as an individual Contractor determines own methods for providing the services Services are not (or normally would not be) performed by a UC employee Services are not interim while recruiting to fill a vacancy Service time Limited to a specific event or One week or less within a year & within one org unit Amount for services: $10,000 maximum Conditions for Retaining an Individual as an INDEPENDENT CONTRACTOR Under a Limited Services Engagement

13 Org unit completes form and obtains independent contractor’s signature on the Limited Services Engagement Form No additional signatures are required Procedures for Retaining an Individual as an INDEPENDENT CONTRACTOR Under a Limited Services Engagement

14 General Rule: org unit should not retain services of a current UC employee (including a student employee) or former employee through a Personal Services Contract Limited Services Engagement Form Payrolling or temp agency However, there are exceptions (see next slide). Use appropriate methods of additional compensation available through the UC payroll system for Current UC employee when doing work Beyond the scope of and not part of their regular appointment Temporarily assigned for a vacant higher-level position Current UC student worker when doing work Similar to existing student employee position where org unit has supervision and control over the work Retaining Employees (Current/Former/Student) for Services

15 Exceptions to the general rule Must be approved; (start with Tax Compliance) Require individual to Be advised from General Counsel that services will not violate Ohio Ethics or other laws Comply with UC’s outside activity requirements (including advance, written approval of the individual’s supervisor) What is an exception or how do you obtain one? Retaining services of a former employee to perform work similar to their former employee role or those of other employees should be through a payrolling or temp agency Limited exceptions on a Personal Services Contract for a current employee or student worker performing work outside of existing position; contact Tax Compliance Limited pre-approved exceptions on a Limited Services Engagement Form; contact Tax Compliance Other exceptions – contact Tax Compliance Retaining Employees (Current/Former/Student) for Services

16 Org unit requesting payment Completes A114, obtains appropriate signatures and submits A114 to Accounts Payable Includes with A114 Invoice or timesheet from independent contractor, indicating work already done Copy of the fully executed Personal Services Contract or Limited Services Engagement Form Note: org unit must not request payment for work prior to the completion of that portion of work. Payments to Individual Contractors

17 Form 1099-MISC UC issues form in January As required by federal tax law (generally – non-employee receiving more than $600 in a calendar year) Form 1042-S Non-resident aliens for tax purposes may instead receive this form instead of 1099-MISC UC issues by March 15 Tax Reporting to Individual Contractors

18 Payments to Individuals for Services (2.3.1) The Policy (2.3.1): Policy questions


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