Kentucky Banner Users Group Non-Resident Alien Taxation Presented by: Doris Settle Diane Carver Western Kentucky University February 3, 2012

2 Session Rules of Etiquette Please turn off your cell phone/pager If you must leave the session early, please do so as discreetly as possible Please avoid side conversation during the session Thank you for your cooperation!

3 Introduction The purpose of this session is to show how Western Kentucky University implemented Non-Resident Alien taxation for our Accounts Payable vendors and our students in Banner The benefits of this session: —Banner can be used without modifying the forms —Banner can store information from Windstar —Both vendor and students can be taxed —Someone else has already created the scripts you will need

4 Introduction How long has Western Kentucky University been on Banner? —Financial Aid – March 1999 —Admissions/Student/AR – October 2000 —Finance – July 2001 —Human Resources – January 2002

5 Introduction WKU has approximately 2,100 full-time employees and 21,000 students We are currently on the following versions of Banner —Financial Aid – Version 8.13 —Accounts Receivables – Version 8.3 —Student – Version 8.5 —Finance – Version 8.6 —Human Resources – Version 8.6 —General – Version 8.4

6 Topics of Discussion Implementing NRA taxation in Accounts Payable Implementing NRA taxation in Students Auditing NRA Amounts and Paying IRS Creating Files for Windstar

Kentucky Banner Users Group Implementing NRA taxation in Accounts Payable

8 Set up tax liability accounts for federal and state withholding on FTMACCT

FTMACCT Course ID

10 Implementing NRA taxation in Accounts Payable Set up rule codes on FTMRUCL for tax withholding on —DDWI Federal Withholding —CDWI Cancel Federal Withholding —DTWI State Withholding —CTWI Cancel State Withholding

FTMRUCL DDWI Course ID

FTMRUCL Posting Modifier Course ID

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FTMRUCL Posting Modifier CDWI Course ID

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19 Implementing NRA taxation in Accounts Payable Update the posting modifier for account on the G010 process code on each of the rule codes with the liability account previously set up on FTMRUCL —Normally the modifier fund is not needed unless liabilities are posted to a separate fund. In which case, the fund should be equal to the liability fund. —We use a separate fund for our liability account with our NRA Update the posting modifier for account on the G020 process code if a separate fund is used for liabilities, otherwise, no posting modifier is needed for G020

20 Implementing NRA taxation in Accounts Payable Create or Update Vendor —A contractor status form must be filled out by department —Tax Compliance Office must approve form —Tax Compliance will fill in Windstar ID, Income Code and Withholding % —Send form to Accounts Payable

Course ID Implementing NRA taxation in Accounts Payable Create or Update the Vendor record on FTMVEND

Course ID Implementing NRA taxation in Accounts Payable

23 Implementing NRA taxation in Accounts Payable Create or Update the Vendor record on FTMVEND —Enter the Tax ID number (Windstar Tax ID), —Enter the Income Type RY = 12 Income Code (00-Exemption Code) RX = 12 Income Code (04-Exemption Code) RE = 15 Income Code (00-Exemption Code & L-Income Code Subtype) RZ = 15 Income Code (04-Exemption Code & L-Income Code Subtype) NC = 16 Income Code (00-Exemption Code) NX = 16 Income Code (04-Exemption Code) FB = 20 Income Code (00-Exemption Code) FX = 20 Income Code (04-Exemption Code) PR = 50 Income Code (00-Exemption Code) PX = 50 Income Code (04-Exemption Code)

24 Implementing NRA taxation in Accounts Payable Create or Update the Vendor record on FTMVEND —Enter a percentage to withhold for either or both federal and state 00 - Must be entered for NRA Vendors even if for 14% 30 - for 30%

Course ID Implementing NRA taxation in Accounts Payable

26 Implementing NRA taxation in Accounts Payable Requester enters a Payment Authorization Form On-line —This is a smart form Once a requester enters id the name & address will fill in Commodity Codes have a drop down list The Vendor is checked for his citizenship status —If status is NRA an approval line is added for Tax Office —A Tax Compliant section is added to end of form

Course ID Implementing NRA taxation in Accounts Payable

28 Implementing NRA taxation in Accounts Payable

29 Implementing NRA taxation in Accounts Payable Tax Compliance Office Receives Form —If Form is correct will sign on Approval line —Fills in Windstar Tax ID, Income Type and Withholding % —Sends Form to Accounts Payable

30 Implementing NRA taxation in Accounts Payable Accounts Payable enters invoice on FAAINVE —If Payment Authorization is for an NRA vendor Check FTMVEND set up —Invoice will have 1099 indicator and income code set —Change income code if different —Complete invoice like normal Tax amount will not show on the form

Course ID Implementing NRA taxation in Accounts Payable

Course ID Implementing NRA taxation in Accounts Payable

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34 Implementing NRA taxation in Accounts Payable Start Check Process —Run FARINVS-Invoice Selection Report —Tax amount will be subtracted from Invoice Amount for Check Amount

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36 Implementing NRA taxation in Accounts Payable Start Check Process —Run checks like normal —We use Evisions Intellecheck process to print our checks The stub will show the NRA tax amount under the Additional Charges column

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38 Implementing NRA taxation in Accounts Payable Finish Check Process —Run FABCHKR (Batch Check Register) The report will show the NRA tax amount under the ADDL CHG/TAX column

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Course ID Implementing NRA taxation in Accounts Payable Finish Check Process —Run FABCHKA (Batch Check Accounting Process) The taxes will go into the Liability Fund and Liability Account 23105

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Course ID Implementing NRA taxation in Accounts Payable Remove from 1099 table —A script is run nightly to remove the NRAs from the 1099 table (The script checks the federal withholding % on the vendor to see if is not null) wkus_fin_NRA_del_FAB1099.sql —If you have existing reports that look at the Tax ID field for 1099 vendors, check to make sure the Federal Withholding field is null

Kentucky Banner Users Group Implementing NRA taxation in Students

Course ID Implementing NRA taxation in Students Assessment of NRAs is made in Windstar A file is exported out of Windstar (containing id, name, and tax information) Transfer file to Banner environment (FTP, etc.)

Course ID Implementing NRA taxation in Students Runs a Crystal Report with a stored procedure —Wkup_tax_intrfac_edit_student Update/insert fields into ROBUSDF table Update/insert citizenship code on SPBPERS table

Course ID Implementing NRA taxation in Students Update/Insert fields in ROAUSDF —Four fields in ROAUSDF (Applicant User Defined Data) have been set up for Windstar data Foreign Withholding Rate Fall —Current Year NRA % Foreign Withholding Rate Spring —Next Year NRA % Foreign Withholding Exemp Code Fall —Current Year NRA exemption code Foreign Withholding Exemp Code Spring —Next Year NRA exemption code

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Course ID Implementing NRA taxation in Students Set up Detail Code Category in TTVDCAT —We used NRA

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Course ID Implementing NRA taxation in Students Set up Detail Code in TSADETC (Detail Code Control Form) —Type = C for Charge —Category = NRA —Check Refundable —Check Like Term and Active —Pay Type = N for Miscellaneous Charges

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Course ID Implementing NRA taxation in Students Set up General Ledger Interface to Banner Finance in TSADETC —Account A will contain the normal Fund and Account —Account B will contain the Fund and Account the G/L Liability account for withholding taxes

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Course ID Implementing NRA taxation in Students Financial Aid will enter funds and amounts —Scholarships, Institutional Awards, etc… on RPAAWRD (Award Maintenance) Funds will disburse to Accounts Receivables —To avoid creating taxes in current year for disbursed funds for Spring, I created a script to change disbursement date for NRA students to new year Wkus_fam_nra_upd_rpradsb_date

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Course ID Implementing NRA taxation in Students When Financial Aid s their award letters a statement is added to the letter for NRA students regarding the tax. —“All non-US Citizens who enter the US under a temporary VISA are subject to taxation at a rate of 14% or 30% on any scholarship funds received that do not pay for tuition and fees.”

Course ID Implementing NRA taxation in Students Students will register for classes, housing and meal plans on-line Charges will appear on their account —TSAAREV (Account Detail Review Form-Student)

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Course ID Implementing NRA taxation in Students Two scripts will run nightly to calculate NRA tax —Wkus_bar_tbraccd_tax_add-This job will add a tax charge (QNWH) to the foreign student if their citizenship code = NR or N and Financial Aid has fed over the following types of funds: Athletic, Scholarships, Federal and State funds —Wkus_bar_tbraccd_tax_credit-This job will credit a tax charge to the foreign student if citizenship changes from the NR or N

Course ID Implementing NRA taxation in Students Excess fee for Betsy Ross = $ Multiply the Foreign Withholding Rate % of 14 from ROAUSDF field 62 (Since we are in the spring semester) Her tax amount will be $ TSAAREV will now show a detail code of QNWH for $168.00

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Kentucky Banner Users Group Auditing NRA Amounts and Paying IRS

Course ID Auditing NRA Amounts and Paying IRS Accounts Receivables Report WKU uses Infoview Crystal Reports to produce our reports —NRA Scholarship Students with Excess of Tuition/Fees Report (Audit Report) Enter the term

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Course ID Auditing NRA Amounts and Paying IRS Accounts Payable Report —Non-Resident Aliens A/P Vendor Amounts for Year Report (This report is used to determine the amount to send to the IRS for A/P) Enter the tax year parameter

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Course ID Auditing NRA Amounts and Paying IRS Accounts Receivables Report —Foreign Withholding Rate (This report is used to determine the amount to send to the IRS from A/R) Enter the begin date Enter the end date

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72 Auditing NRA Amounts and Paying IRS Paying IRS —Each deposit uses the IRS Electronic Federal Tax Payment System (EFTPS) —Student withholding taxes will be paid at the end of any quarter-monthly period —Accounts Payable will be deposited according to the IRS rules

Kentucky Banner Users Group Creating Files for Windstar

74 Creating Files for Windstar Windstar Technologies has a Standard ID Definition and 1042S-Payment Information Layouts for importing files into Windstar —2 scripts create the import files for Accounts Payable and Student —A person may have multiple records depending on their income code, exemption code and withholding rate —As long as those fields stay the same the amounts are summarized —The files are created in January for the preceding tax year

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76 Creating Files for Windstar Accounts Payable —Wkup_nra_ap_windstar_dat Creates the log file “import_nra_ap_yyyy.txt” File is placed in a directory for Windstar import Student —Wkup_stu_foreign_1042S_dat Creates the log file “import_1042s_yyyy.txt File is placed in a directory for Windstar import

77 Creating Files for Windstar Cut 1042-S forms out of Windstar not Banner —We print the forms in late January

78 Summary NRA withholding tax can be accomplished using Banner forms and a few scripts For this to work correctly many departments must be involved: Tax Compliance, Accounts Payables, Financial Aid, Accounts Receivables and IT Now something that was very manual has become automated

79 Questions & Answers

80 Thank You! Doris Settle Diane Carver