Policy Statement

Funds may be used for ordinary, reasonable, and necessary business expenses, incurred in furtherance of the University’s missions, subject to appropriate documentation.

Reason for Policy

The University supports the proper stewardship of University funds in furtherance of the University’s tax-exempt mission. The University receives, from a variety of sources, funds that carry with them fiduciary responsibilities. This policy contemplates also that certain institutional duties and responsibilities have been delegated to the operating units of the University involved in the conduct of business. Accordingly, this policy provides guidance on permissible expenditures of University funds from all sources for University business expenses.

Research Subject Payments

Payments and incentives given to individuals for research participation are considered taxable payments for services and are subject to IRS income reporting requirements. The University must report to the IRS all payments made to any single individual in any single calendar year that aggregate to $600.00 or more unless the recipient is a nonresident alien for tax purposes, in which case all amounts must be reported. The University must report to the recipient all payments made to them in any single calendar year that aggregate to $600.00 or more on IRS Form 1099 (for US citizens and permanent residents). For nonresident aliens, the University is required to report all payments (regardless of amounts) using IRS Form 1042-S.

This policy requires faculty/department administrators responsible for and having custody over authorizing/disbursing payments to research subjects for their research study/projects to report payments made to individuals to the University’s Accounts Payable department. Social security number (SSN) is required to be requested or retained for individual research subjects receiving payments of $500.00 or more per calendar year, per protocol. Regardless of amount, all payments made to an individual must be supported by complete and relevant support documentation.

Who is governed by this Policy

This policy applies to any University personnel involved with research and payments to study subjects.

Forms and Resources

This listing includes Accounts Payable Forms related to research subject payments.

Form Name	Use
ACH Form	To collect supplier/payee banking information to complete payment electronically to a bank account within the US.
Payment Request	To request payment when Supplier Invoice Request cannot be used due to lack of security to the FAO to be charged or the FAOs to be charged are in two or more companies
Reporting of Taxable Payments	Optional form to report tax reportable payments that were not processed/paid via PO, PCard, SIR, or the Participant Payments system. That is, use when cash/petty cash, gift cards, or gifts are given to study subjects or for payment of services.
Request for Taxpayer Identification Number	To collect a supplier/payee tax identification number.
Paying Research Subjects	Guide providing several traditional and non-traditional payment methods for payments to research subjects. The guide lists payment options, an order of preference, reference information, contacts for questions, and other guidance for when and how to use each.
Research Subject Payment Procedures	Accompanies the Research Subject Payments Policy, providing information on the procedures to follow related to information collection and reporting to Accounts Payable.
Workday Foreign-EFT Payment Questionnaire Guide	To collect supplier/payee banking information, for payments requested via Workday, to complete payment electronically to banks outside the US or in foreign currency.
Sprintax Overview for International/ Nonresident Payees for US Tax Purposes	U.S. tax and immigration laws require the University of Rochester (UR) to collect information from payees that are not US Citizens or Resident Aliens for tax purposes. UR uses Sprintax, a secure online tax compliance system, to facilitate this process. The guide provides a quick overview and help options.

Related Policies

This listing includes the policies related to research subject payments, including considerations for potential tax reporting.

Policy Name	Description
Payments to Foreign Nationals	Information regarding payments to nonresident aliens for services and prizes/awards that are taxable and generally require tax withholding
Petty Cash Policy	Policy governing establishment and use of petty cash funds
Taxable Payment to Individuals	Information regarding tax reporting responsibilities

Contacts

Subject	Contact Department	Email Address
Research Subject Payments Policy inquiries	Accounts Payable	AccountsPayable@ur.rochester.edu
Business Expense Policy inquiries	Accounts Payable	AccountsPayable@ur.rochester.edu
Employee and Student Expense Reimbursement related inquires	Accounts Payable	Business_Expense_Reimbursement@ur.rochester.edu
Purchasing Buying and Paying Guide: Preferred procurement method, preferred suppliers, Workday P2P Functionality	Corporate Purchasing	service.rochester.edu/procurement or Procurement_Service_Center@ur.rochester.edu
International considerations for research subject payments	Office for Global Engagement	Global@rochester.edu
Award- and Grant-specific inquiries	Office of Research Accounting and Costing Standards (ORACS)	ORACS-NOA@finance.rochester.edu
Tools and support to help faculty and staff with administration of clinical trials (i.e.: OnCore or Participant Payments)	Office of Clinical Research	Clinical_Research@URMC.Rochester.edu
Institutional Review Board process and approval status	Office for Human Subject Protection	RSRB_Inquiry@URMC.Rochester.edu or your designated Specialist
Tax reporting considerations outside of this policy	Tax Department	TaxDept@finance.rochester.edu

Definitions

• Central Finance: Within the University Controller organization, Central Finance includes the Accounts Payable department responsible for coordinating payment tax reporting to the IRS and to the individual.
• Division/departments: References University department personnel directly engaged in making payments to research subjects. These personnel can be the Primary Investigator (PI) and/or other responsible administrative personnel for the research study.
• Expense Reimbursement: Payment to research subject/caregivers for documented, actual out-of-pocket expenses (e.g., transportation, parking, lodging, meals, etc.) incurred as a result of their study participation. Reimbursements that are substantiated with supporting documentation are not taxable and should not be included when computing if a person has reached the tax reporting threshold.
• IRS: Internal Revenue Service of the United States of America.
• Nonresident Alien for tax purposes: As defined by the IRS, any individual who is not a US citizen for tax purposes.
• Payment: Funds paid to an individual for their participation in research projects or reimbursements for expenses. Preferred payment method is the Participant Payments system. See Payment Types for additional details, requirements, and conditions.
• Research Subject: Human Subject – A living individual about whom an investigator (whether professional or student) conducting research: Obtains information or biospecimens through intervention or interaction with the individual and uses, studies, or analyzes the information or biospecimens; OR Obtains, uses, studies, analyzes, or generates identifiable private information or identifiable biospecimens.
• TIN/SSN: The Taxpayer Identification Number (TIN) is used by the IRS in the administration of tax laws. The Social Security Number (SSN) is assigned to US citizens and some residents of the US while an Individual Taxpayer Identification Number (ITIN) is assigned to others whose requests meet IRS criteria.
• US Citizen for tax purposes: The IRS treats US Citizens and Permanent Residents the same for tax reporting purposes. In the context of research subject payments, tax withholding is not required and amounts are reported for an individual when payments aggregated across the University reach $600 or more.

Responsibilities

Accounts Payable Department

For a single calendar year, Accounts Payable is responsible for and required to report to the IRS and to the recipients on Form 1099 all payments made to individuals of $600.00 or more (for US citizens and permanent residents). For nonresident aliens, the University is required to report all payments, regardless of amount, using IRS Form 1042-S. The University is not required to report payments to the IRS if the study subject is a nonresident alien (as defined by the IRS) and all participation is performed outside of the United States.

Faculty/Department administrator/cash disburser

Those making purchases/incurring expenses, initiating reimbursement or payment of expenses, and approvers of expenses that will be charged to the University books and records must be familiar with the University’s policies and procedures. See Guidelines for Financial Approval for information about approvals for Requisitions/Change Orders, Supplier Invoice Requests/Supplier Invoices, and PCard transactions.

The divisions/departments are responsible to control, account for, report to Accounts Payable, and to properly safeguard University assets (i.e., the Participant Payments system, petty cash, gift cards/certificates). The faculty/department person involved in disbursing payments to research subjects shall obtain and keep adequate records for audit and accounting purposes to support the use of funds. Furthermore, if any research subject receives payments of $500.00 or more in any single calendar year from the research study, the faculty/department person shall collect information from the recipient (i.e., a Form W9) and immediately forward to Accounts Payable for retention. If tax reporting for the study subject is required because of payments for multiple studies or other payments to the individual, but your department did not pay them $500.00 or more, you are required to collect a W9 from the study subject when requested by Accounts Payable. No copy of the W9 or Social Security Number should be retained by the department.

For payments to nonresident aliens, Accounts Payable must be notified once a study subject is determined to be a nonresident alien or they do not provide a valid Form W-9 as required. At that time, the department is responsible for making arrangements to complete all subsequent payments via Supplier Invoice Request (SIR). The Supplier Request and SIR must indicate the study subject is a nonresident alien, and the department must provide an FAO designated so that appropriate tax withholding can be completed on the prior payments.

For each individual research subject, the department shall submit payee information and payment amounts to Accounts Payable as soon as it is obtained or no later than December 31 of the calendar year. The Participant Payments system and Workday are configured such that when those systems are used to make the study subject payments, users are prompted to provide the tax reporting information (Name, Social Security Number, and address), which should be collected on a W9 or Sprintax/W8-BEN as appropriate. All other payment types (gift card, survey tool, petty cash, gift, etc.) require forwarding of the payment information to Accounts Payable.

Required Documentation

All payments must be documented for internal controls and audit purposes. The information listed below is required to be captured by the division/department as part of the research record supporting payment to all study subjects. Payment documentation should be stored separately from research data.

• Subject’s name or identification number
• Date
• Amount
• When payment(s) to a US Citizen/Permanent Residents reaches $500.00 or more, IRS Form W-9 is required
  • Forms W9 should be immediately emailed to Accounts Payable for retention. The W9 should be confidentially destroyed after emailing to Accounts Payable as no copy of the W9 should be retained by the department. When emailing W9s to Accounts Payable, include a subject line regarding how the individuals were paid such as Participant Payment W9s or Petty Cash W9s.
• When payment is to a Nonresident aliens for tax purposes for any amount, Form W-8BEN is collected via the Sprintax system, for which the study subject’s email address is required.
• Social security number (SSN) of study subjects should not be retained at the division/department level for any reason. At the time that a study subject is about to receive a payment that would put the subject at or over the $500.00 annual reporting threshold, a W9 should be completed and immediately forwarded to Accounts Payable for retention.

Confidential or Legally Restricted information, including the name of the study, should be excluded from your submissions to Accounts Payable of W9s and payment requests, including Supplier Invoice Request. See Data Security Classification Policy for more information about the confidentiality of different types of data.

Payment Types

Below is an abbreviated outline of payment options available for payment to research subjects. Additional details can be found in the Paying Research Subjects guide which provides several traditional and non-traditional payment methods for payments to research subjects. The guide lists payment options, an order of preference, reference information, contacts for questions, and other guidance for when and how to use each.

Options, in order of Best Practice	Additional Information can be found here:		Email for Questions
Participant Payments system: It is expected this is the default for IRB-approved studies	Participant Payments		OCR_Finance@URMC.Rochester.edu
Direct University payment via Supplier Invoice Request (SIR): Recommended for larger dollar amounts. Payment can be via USD Check, ACH, EFT, or foreign currency EFT.	Supplier Invoice Request (SIR) Resources		AccountsPayable@ur.Rochester.edu
Important reminders when using any of the below remaining payment methods: Remember to report the payments to Accounts Payable so that the amounts can be consolidated across the University.  If any of the payees are nonresident aliens, contact Accounts Payable to determine if any tax withholding entries are necessary.
Gift Cards/ Certificates: Convenient when preference is to hand out payment at time of survey completion or visit.	Supplier Invoice Request (SIR) Resources		AccountsPayable@ur.Rochester.edu
Online Survey Tool: Examples are Amazon Mechanical Turk and Prolific. Payment to the service provider can be made via preferred methods of PCard or Supplier Invoice Request.	PCard Resources Supplier Invoice Request (SIR) Resources		Pcard Administrator Procurement_Service_Center@ur.rochester.edu
Flywire: For international research subjects that do not have a domestic bank account.			TreasuryGroup@ur.Rochester.edu
Cash (Petty Cash): Recommended for low dollar and low volume of payments. Option when preference is to hand out payment at time of visit.	FR&AO Policies and Procedures > Petty Cash Policy		Petty Cash: GeneralAccounting@UR.Rochester.edu
Gift: Only acceptable for remote, secluded, or other special international research scenarios. Gift value must be tracked for tax reporting purposes since the gift is considered their compensation for participation in the study.			AccountsPayable@ur.Rochester.edu
Caution/Warning: Remaining payment methods should not be considered as options as they are only offered for rare emergency situations.  Exception Approval required for these payment options.
Personal Funds: Warning: Do not use cash, personal funds, or personal credit to pay research subjects unless it is unavoidable and has been approved in advance by the University’s Controller, Treasury, and Accounts Payable.		Email AccountsPayable@ur.Rochester.edu with Subject: Personal Funds for research study payment for inquiries and to initiate approval requests
Cash Advance: If approved for research subject payments as noted above, can be obtained by either utilizing the traveler’s AMEX Corporate Card or Expense Report.
Department Checking Account: In special (but rare) circumstances, the University’s Treasury Office has authorized a separate checking account to a department to pay research subjects by departmental check rather than a University check. Those departments may continue to use this method of payment.
Unauthorized Forms of Payment: Venmo, PayPal, Cash Applications Under no circumstances should investigators utilize Venmo, PayPal, or other cash applications to pay research subjects. University funds (received via petty cash or advance) should not be transmitted via Venmo, PayPal, or other cash applications to research subjects.

Transfer of items

Items used as part of the research project may be given to the study subject if there is no further value to the study or creates a burden to collect from the subject. Examples could be fit bits (fitness/health trackers), foot pedals, exercise kits, or similar. Occasionally research sponsors donate items of low value, such as bookbags, with or without logos. For any of these items given to the study subject, the value, in its final condition, should not exceed $100. Offering to the study subject to retain the study item or providing a donated item to the subject is not payment for research participation and is not required or expected.

Reimbursements

Reimbursement to the study subject, or their caregiver, is allowed as a business expense and not subject to tax reporting subject to the following requirements.

• Only actual expenses incurred may be reimbursed.
• Expenses must be related to participating in the study.
• As described in the study protocol, expenses reimbursed may be
  • travel-related: bus fare, airfare, uber/lyft and similar; for personal vehicle driven mileage rate must be used
  • lodging
  • meals
• Reimbursement amounts under $50.00 do not require supporting documents (that is, receipts). Reimbursement amounts $50.00 or more require documentation supporting the amount being reimbursed.

Amounts that do not meet these criteria: are not allowed as a business expense and require collection of a W9 to complete payment, which must be done via Supplier Invoice Request.

Special Situations

Research subject is a minor child

If the child is the research subject, they should be paid in their own name and social security number.  The method of payment may impact whether payment can be made directly to the minor.  If needed, an alternate payment method, for example other than the Participant Payments system, can be used to pay the minor directly.

Research subject is a nonresident alien

When the payment recipient is a nonresident alien, the IRS has different tax reporting requirements.

• Payments to nonresident aliens for studies conducted entirely outside of the US (e.g., online survey where non-US subjects are targeted, researcher traveled outside of US to conduct surveys/research on subjects) are exempt from IRS tax withholding. However, payments being made to individuals or entities outside the U.S. do require review and verification to ensure that financial assistance is not being provided to a blocked or sanctioned individual/entity.
• Otherwise, all study subject payments to nonresident aliens require 30% to be withheld for taxes and remitted to the IRS at the end of the month. Therefore, once a study subject is identified to be a nonresident alien or does not provide a valid Form W9 when requested,
  • The Supplier Request, if needed, and SIR questionnaire must be completed properly indicating the payee is an NRA
  • Accounts Payable must be provided with an email for the individual to create a Sprintax record.
  • A Supplier Invoice Request (SIR) must be utilized for subsequent payments, regardless of the prior payment mechanism, so that required taxes can be withheld.