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PRESENTED BY: UNIVERSITY PURCHASING, HUMAN RESOURCES, AND TAX SERVICES PSA TRAINING.

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Presentation on theme: "PRESENTED BY: UNIVERSITY PURCHASING, HUMAN RESOURCES, AND TAX SERVICES PSA TRAINING."— Presentation transcript:

1 PRESENTED BY: UNIVERSITY PURCHASING, HUMAN RESOURCES, AND TAX SERVICES PSA TRAINING

2 WHAT IS A PROFESSIONAL SERVICES AGREEMENT? Professional Services Agreement, more commonly called a PSA, is a legal contract for professional services between MUSC and the contractor. Use a PSA when hiring persons or companies employed on a fee basis and not providing a tangible product

3 ITEMS TO CONSIDER BEFORE ENTERING INTO A PSA Nature and scope of the services to be provided in relation to the services required are reasonable Necessity of contracting for the service, considering the institution’s capability in the particular area The qualifications of the individual or business rendering the service Fees charged Past pattern of such costs

4 ITEMS TO CONSIDER BEFORE ENTERING INTO A PSA Whether the service can be performed more economically by direct employment rather than contracting On Federal Grants, whether the proportion of federal work to the institution’s total business is such as to influence the institution in favor of incurring the cost; Would this be a need if you did not have the grant particularly where the services rendered are not of a continuing nature and have little relationship to work under Federal grants and contracts.

5 THE PSA CONTRACT Use the latest PSA form revision dated 9/27/2013 The PSA contract should be completely filled out Submit the PSA contract unsigned by the vendor Allow 30 days for your PSA to be completed after UDAK approval

6 PSA CONTRACT Services should not begin before a purchase order is issued and the PSA is signed and fully executed If services begin prior to a fully executed contract and purchase order being established, this will constitute an unauthorized procurement.

7 PSA CONTRACT The Agreement Period constitutes when the contract begins and ends The PSA contract has been reviewed and approved by Legal. However, if you or the contractor make changes to the PSA, Legal will have to review and approve the revised contract.

8 Agreement Period: The agreement date should be a future date. Edit the “first day of” to coincide with the day the agreement begins. Example: Agreement begins January 15 th would read “entered into this fifteenth day of January ” Terms of the Agreement: This section should clearly state the type of service the vendor will be providing along with details of the service and deliverables. The deliverables should state the timeline of the service being provided and what amount will be paid for the completed service. Fee Schedule: Choose item 1 or 2 and fill in the required information. Delete the section that is not used.

9 Out of pocket expenses: Choose one and delete the other option. Include a do not exceed amount for out-of-pocket expenses Enter out-of-pocket expenses as a second line on the requisition Option 1 is used when out-of- pocket expense is considered as part of the fee.

10 MUSC Coordinator : MUST BE COMPLETED. Fill in the MUSC Coordinator’s Name and Address.

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12 MUSC Signature: The MUSC signature will be provided by Purchasing only The Buyer will send the PSA contract to the Contractor (Vendor) for signature

13 REQUIRED DOCUMENTATION PSA form (unsigned by the Supplier) Employee Independent Contractor Classification Checklist (EICCC) A Grant Certificate or Sole Source justification memo for PSA’s greater than $10,000 If this information cannot be provided the service may be subject to the formal solicitation process Major Purchase Form if contracting with a true Consultant for fees in excess of $50,000. Definition of a Consultant: One who is contracted to provide opinion, advice, counsel, or to deliberate together with MUSC.

14 REQUIRED DOCUMENTATION When submitting a PSA you must ensure that all documentation is attached Failure to attach proper documentation will extend processing time while we contact you to obtain the missing documentation.

15 PSA Amendment: Use the PSA Amendments form for change(s): in the Scope of the work in price/fees In performance period Name, performance location

16 PSA-INDIVIDUAL FORM Enter the Supplier name. If the Supplier is not currently available in the MarketPlace, select “PSA Vendor” as the Supplier. Enter the Quantity, Rate, and Total Cost. Include the Start and End Date of the Contract, along with a description of the services to be provided

17 PSA- NON-INDIVIDUAL FORM Enter the Supplier name. If the Supplier is not currently available in the MarketPlace, select “PSA Vendor” as the Supplier. Enter the Quantity, Rate, and Total Cost. Include the Start and End Date of the Contract, along with a description of the services to be provided

18 Individual Form Requisition then routes to: Human Resources Tax Services Purchasing Non-Individual Form Requisition then routes to: Tax Services Purchasing WHAT HAPPENS NEXT

19 Once approved by both departments: requisition will be received in University Purchasing for review If the Contractor is not set-up in the MarketPlace, the Buyer will obtain all required paperwork (W-9, W8-BEN (foreign vendor), etc.) and complete the New Vendor Request form in the MarketPlace. Purchasing Management will review and sign the PSA. Buyer will contact the Contractor to obtain required signatures. Buyer will attach the fully executed PSA and issue the purchase order.

20 HUMAN RESOURCES

21 HR reviews the responses indicated on the EICCC (Employee/Independent Contractor Classification Checklist), primarily Section 1 Relationship with the University and Section 2 Classification Guidelines. Also, Section 3: IRS Rule Test. At the end of the checklist there are definitions of Employee and Independent Contractor.

22 HUMAN RESOURCES Definition of Employee: An individual who performs services that are subject to the will and control of an employer – both what must be done and how it must be done. The employer can allow the employee considerable discretion and freedom of action, so long as the employer has the legal right to control both the method and the result of the services. Definition of Independent Contractor: An individual over whom the employer has the right to control or direct only the result of the work and not the means and methods of accomplishing the result. HR is also interested as to whether the individual will be performing the assigned responsibilities, partially or totally, on campus for background check purposes. If the PSA is deemed to be that of an independent contractor and the individual will be on campus, HR will work with the requestor to initiate a background check on the individual in question.

23 PSA’S AND TAX ISSUES

24 INDEPENDENT CONTRACTOR VS EMPLOYEE From a tax perspective, the general premise of each PSA is determining the control of the services to be provided in categorizing the payee as an independent contractor or employee. Independent contractors are taxed differently from employees, and substantial penalties could be imposed upon MUSC if the wrong classification is made. According to the IRS, there are three basic categories one should consider when assessing whether a person is an employee or independent contractor: behavior controls, financial controls and the relationship.

25 THINGS TO REMEMBER All contracts are unique and it may be a combination of factors that determines whether it’s An employee/employer relationship An independent contractor relationship An Allowable expense per State or Federal regulation

26 THINGS TO REMEMBER (CONT.) The MUSC Employee Independent Contractor Classification Checklist should be completed with careful consideration to each scenario. MUSC needs to determine where the work will be done. In other words, if the individual is to be performing services, totally or partially, on the MUSC campus, a background check needs to be administered to satisfy Human Resource policy.

27 THINGS TO REMEMBER (CONT.) A Form W-9 (or Form W8-BEN if the individual is a non- resident) must be obtained to confirm taxpayer identification number. Purchasing will obtain when required Terms of each contract need to be thorough and descriptive so that each department reviewing is fully aware of all the duties that will be performed. Once all data has been gathered and is complete pertaining to the contract, HR and/or the Tax Office will determine the proper classification of the payee.

28 FOR MORE INFORMATION View the Tax Compliance web site at: http://academicdepartments.musc.edu/vpfa/finance/cont roller/accounting/gentax.htm http://academicdepartments.musc.edu/vpfa/finance/cont roller/accounting/gentax.htm For more information on independent contractors or employees, visit: http://www.irs.gov/Businesses/Small-Businesses-&-Self- Employed/Independent-Contractor-Self-Employed-or- Employee For questions and assistance with PSA’s, contact your Buyer or purchasingcentral@musc.edupurchasingcentral@musc.edu


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