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Payment for Personal Services

Federal and State laws require the University of Wisconsin System to report many taxable payments to the IRS, the Wisconsin Department of Revenue, and the individual receiving the payment. In some cases, the University is also required to withhold federal or state income taxes from payments. Payment is made via the "Payment to Individual Report" form. The following provides a step-by-step process to be used when securing personal services.

  • When contracting for personal services, consideration must first be given to utilizing the services of employees of the University and the University System. Employees of UW-Eau Claire must be paid on payroll. To initiate payment, contact the Academic Affairs office. Travel expenses will be reimbursed on a travel expense report and in compliance with State travel regulations.

  • The services of individuals employed at other campuses within the UW-System are secured via an Inter-Institutional Agreement form or a Personnel Action Request form. Contact the Academic Affairs office for assistance. When an Inter-Institutional Agreement form is used, payment is made on the individual employee's home payroll with reimbursement made by UW-Eau Claire to the institution upon receipt of an invoice from the institution's Business Office. The UW-Eau Claire University Accounting office can provide assistance in completing the Inter-Institutional Agreement. If services are secured via a Personnel Action Request, payment is made via UW-Eau Claire's payroll. Travel expenses will be reimbursed on a travel expense report and in compliance with State travel regulations.

  • When contracting for the services of an individual who is an employee of another State agency (e.g., Department of Public Instruction, Department of Natural Resources, Department of Transportation), an Employee Interchange Agreement must be completed only when compensation for services and/or travel expenses are involved. Payment will be made via the employee's home agency's payroll with reimbursement to that agency upon receipt of an invoice. The completed agreement is to be forwarded to the employee for his/her signature. A copy of the fully signed agreement must be returned to the University and forwarded to Accounts Payable along with the invoice from the home agency and a purchase requisition authorizing payment from the proper budget. Travel expenses will be reimbursed on a travel expense report and in compliance with State travel regulations.

  • Payments to other individuals for $500 or less (excluding itemized travel) shall be made on a Payment to Individual Report. If the University agrees to reimburse travel expenses, the travel expenses may be included on the PIR form. If the travel expenses are itemized, substantiated by receipts, and in compliance with existing travel regulations applicable to UW-State employees, they will not be reported to state and federal tax offices. Adequate accounting for travel expenses is as follows:

    • Lodging: Must be single rate with original receipt.
    • Airfare: Must be other than first class with original or photocopy of the passenger coupon provided.
    • Car Rental: Must be mid-size or smaller with original receipt provided.
    • Meals: Must be reasonable.
    • Miscellaneous: Must be UW business-related and supported by a receipt if over $25.

When contracting for personal services of other individuals or a group of individuals for more than $500, a determination must first be made as to whether or not an employee/employer relationship exists. If an employee/employer relationship does exist, the individual(s) are to be paid on payroll. Travel expenses will be reimbursed on a travel expense report and in compliance with State travel regulations.

If no employee/employer relationship exists, the individual(s) are considered independent contractors. A purchase requisition to contract for personal services and a Payment to Individual Report form are to be prepared and forwarded to Accounts Payable to initiate payment. Forms may be obtained from Accounts Payable. Purchase orders can be issued for services that are NOT unique, noncompetitive activity supporting instruction, research, or public service. In these instances, payment will be made upon receipt of an invoice. An independent contractor is not eligible for fringe benefits and is not subject to State liability protection or eligible for Workers and Unemployment Compensation.

When the service IS determined to be a unique, noncompetitive activity supporting instruction, research or public service, an Academic Support Services Agreement will be executed by Accounts Payable/Purchasing and mailed to the individual(s) for fees in excess of $5,000. Payments will be made upon receipt of an invoice from the individual(s) or by a Payment to Individual Report (PIR) form prepared by the department.

NOTE: Currently enrolled students must be paid on student payroll for their services. Students not attending summer school but continuing on in the fall must also be paid via student payroll.

The PIR form is not to be used for payment to individuals for salaries, employee reimbursements of any kind, applicant interview expenses, student recruitment expenses, or payments to subcontractors or architects. The form is not needed when an invoice is received against a purchase order or an Academic Support Services Agreement as long as a Social Security number or tax identification number and a home address are provided. Exception: A PIR must be prepared when payment is made to a nonresident alien.

The rules regarding federal tax withholding on nonresident aliens are varied and complex. In some cases, payment may be exempt or subject to a reduced withholding rate if the nonresident alien has filed for an exemption on IRS Form 1001, 4224, or 8233. These forms are in limited supply in Accounts Payable. It is the responsibility of the individual to determine his/her own personal tax situation and file whichever form is necessary to receive an exemption from withholding where applicable. These forms must be presented with the PIR or federal tax will be withheld.

Contact Accounts Payable several days in advance of a desired payment to a nonresident alien for two very important reasons:

  1. For guidance to assure completion of the necessary paperwork; and,
  2. To allow for a 10-day payment waiting period required of the University by the IRS.

For the services of entertainers and public speakers, formal contracts must be prepared and signed by representatives of each party. Entertainment contracts for under $2,500 are to be signed by the Director of University Centers or designee regardless of where on campus the entertainer performs. Contracts for $2,500 and over are to be signed by the Assistant Chancellor for Budget and Finance. Payments are made using the signed contracts when a Social Security number or a federal identification number of the performer and the permanent home address of the performer are included in the contract.

The State of Wisconsin requires 6% tax withholding on all payments to entertainers and public speakers who are not Wisconsin residents and who earn $7,000 or more from a UW campus during a calendar year. Withholding is not required if the entertainer files a surety bond or a deposit with the Wisconsin Department of Revenue for at least the amount of the contract price and provides an original Form WT-10 to the University.

Reference UW-System Financial Policy and Procedure Paper #31 for additional information from the Internal Revenue Service regarding an employee/employer or independent contractor relationship.