Presenter: Maria Araque Senior Tax Analyst GENERAL ACCOUNTING - TAX

University Sales Tax Exemption Collection of Sales tax Payments to Nonresident Aliens (Individuals) Payments to Foreign Vendors (Entities) TAX OVERVIEW

The State of IL has granted LUC an exemption from Sales Tax, Use Tax, and Retailer’s Occupation tax both at the state and local level The tax exemption is to be used exclusively to make purchases for use by LUC and is not for personal use by individuals, faculty, staff, or students LUC’s tax-exempt status should be protected as any misuse could jeopardize our tax-exempt status LUC’s tax exemption should not be used for the benefit of outside organizations UNIVERSITY SALES TAX EXEMPTION

Exceptions: LUC is not exempt from IL Lodging tax incurred at hotels Other states besides Illinois may grant LUC a sales tax exemption due to its not for profit status LUC has been granted tax-exempt status in the following states: - Arkansas, Florida, Indiana, Missouri, New York, Ohio, and Wisconsin Requests for LUC’s Tax-Exemption letter should be sent to Purchasing or to the Senior Tax Analyst UNIVERSITY SALES TAX EXEMPTION

The University is responsible for the collection of Illinois sales and use tax on sales of general merchandise and food, which it must collect from its buyers This includes merchandise and food sold via ticketed events, fundraisers, and direct sales of items such as t-shirts. In addition to sales tax, the University is responsible for the collection of lodging tax, lease tax, etc. If you have questions on whether the sale of an item is subject to the collection of tax, please contact Brigid Smith, COLLECTION OF SALES TAX

A nonresident alien is an individual who is not a U.S. citizen/permanent resident or considered a resident alien for tax purposes Typically, most nonresident alien visitors that come to LUC are present on tourist/business visas (B-1/B-2) or on Short term scholar visas (J-1),visiting for less than 3 months The University also contracts with nonresident aliens who perform services outside the U.S. and would not have a specific immigration category The University must abide by IRS rules and regulations as well as Immigration rules when paying foreign visitors. Please see the Procedures for Paying nonresident alien visitors on the LUC website for further information. PAYMENTS TO NONRESIDENT ALIENS

Services Performed or travel reimbursement in the U.S. Services Performed or travel reimbursement outside the U.S  IRS Form W-8BEN (Certificate of Foreign Status)  Foreign National Independent Contractor Form and Items on the first page of the checklist  Invoice/Agreement stating where the services took place (only needed for services)  Documentation should be included with either the AP Check Requisition or Treasury EFT request Subject to U.S. income tax reporting and withholdingNot subject to U.S. income tax reporting or withholding Service Payments & Travel Grants - may be subject to 30% income tax withholding unless individual has a U.S. SSN/TIN and an income tax treaty exists PAYMENTS TO NONRESIDENT ALIENS Where the services/travel take place will dictate what documentation is needed in order to request payment

A foreign vendor can be a foreign corporation, not for profit organization, a foreign estate, or foreign trust. LUC contracts with foreign vendors to purchase goods and services Payments may be subject to U.S. income tax reporting and withholding A Form W-8BEN-E is required from every foreign vendor and should be included with either the AP Check Requisition or Treasury EFT request PAYMENT TO FOREIGN VENDORS

FORM W-8BEN FORM W-8BEN-E

Procedures for paying nonresident alien visitors: Foreign National Independent Contractor Form: Form W-8BEN (Individuals) Form W-8BEN-E (Entities) TAX RESOURCES

Contact Information: Sales Tax Foreign Vendor Payments Brigid Smith Maria Araque (312) (312) QUESTIONS?