1. www.brandeis.edu/controller Brandeis University Consultant Policy Office of the Controller Training Seminar March/April 2005

2. www.brandeis.edu/controller Agenda Introduction Why are we doing this? What’s changed? When is it effective? Consultant/Honorarium Approvals and Other Requirements What is an Independent Contractor? What is a Consultant? What is an Employee? What is a Honorarium? Independent Contractor v Employee AP v Procurement Examples Process Flow Forms Paying foreign consultants Questions

3. www.brandeis.edu/controller Introduction Loretta Bemis – Associate Controller Ofer Ben-Gai – Assistant Controller Debbie McQuaid – AP Manager

4. www.brandeis.edu/controller Why are we doing this? Internal Factors In synch with University Procurement Policy. Encumber services. Use of approved contract template. New forms to standardize hiring and payment of consultants. External Factors IRS regulations on employment classification. Federal grantor requirements for standard policy regardless of funding source.

5. www.brandeis.edu/controller What’s Changed? Contractual Agreement Approval Amount Forms Independent Contractor Status Other

6. www.brandeis.edu/controller When is it effective? Effective July 1, 2005. Transition period; now through end of fiscal year. Evaluate forms and process. Review existing long-term consulting arrangements. Prepare contracts and encumbrances for next fiscal year.

7. www.brandeis.edu/controller Total Amount Budget Availability and Approval Contract Review Controller Determination of Independent Contractor Status Bid Requirements (Contact Procurement Office) 1,500 or lessUnit Budget Manager or designee, or Dept Head, PI for grant funded University Treasurer if template contract not used (not required for honorarium) Not required More than $1,500 but less than $10,000 Unit Budget Manager or designee, or Dept Head, PI for grant funded University Treasurer if template contract not used YesNot required $10,000 to $100,000Unit Budget Manager or designee, or Dept Head, PI for grant funded Dean, or Assoc VP University Treasurer if template contract not used YesYes if > $25,000 Over $100,000Same as above AND Executive Vice President University TreasurerYes $5,000 or less all Honoraria regardless of funding source and Research Consultation charged to a grant Unit Budget Manager or designee, or Dept Head, PI for grant funded Contract Not required Not required Consultant/Honorarium Approvals and Other Requirements

8. www.brandeis.edu/controller What is an Independent Contractor? An entity or individual not employed by the university who performs the required task or tasks according to the contractor’s own manner and method, outside the control of the university. University has the “right to control or direct only the result of the work and not the means and methods of accomplishing the result.” (I.R.S.)

9. www.brandeis.edu/controller What is a consultant? An entity or individual who provides expert or professional analysis, services or advice on a short term basis. In virtually all cases, a consultant is a form of independent contractor and consulting services are performed by independent contractors. Normally possess specialized skills, knowledge or credentials not readily available among university faculty and staff. An individual or firm that is retained to provide professional advice or services for a fee, but not an employee of the organization. (from NIH Grants Policy Statement 10/98 Part II: Terms and Conditions of NIH Grant Awards) Federal, state and FICA taxes are not withheld.

10. www.brandeis.edu/controller What is an employee? Every individual that performs services subject to the will and control of an employer, both as to what will be done and how it will be done is an employee. (I.R.S.) An employee depends on an employer for income on a continuing basis and is subject in the assigned work to the supervision and control of the employer. In most cases, cannot be a current or former employee and consultant in same calendar year even if independent contractor status is applicable. A regular employee is hired by the University for an unspecified time period while a temporary employee is hired for sporadic or casual employment.

11. www.brandeis.edu/controller What is an Honorarium? Academic term; form of independent contractor. A one time payment to confer distinction or to symbolize respect, esteem or admiration for the recipient. Given in addition to or in lieu of reimbursing for expenses. Not contractual in nature. Not a legally required payment. Paid at the discretion of the University. If payment has been negotiated with the recipient and is given in return for services provided, it should be considered a speaking fee or consultant payment under the guidelines of this policy if payment exceeds $5,000.

12. www.brandeis.edu/controller Independent Contractor v Employee The “20 Common Law Factors” Right to control what work will be done and how work will be done = employer-employee relationship = common law employee “Categories of Evidence” created by IRS in 1996 to update factors that clearly indicate the degree of control or independence in the relationship of the worker and the business Behavioral Controls Financial Controls Relationship of the Parties

13. www.brandeis.edu/controller AP v Procurement Examples Procurement Services P.O. or PCard Normal operational goods and related services Maintenance contracts Mail houses Printing services Accounts Payable Individual or firm engaged to: Design mailing, website, forms Prepare a special report or offer professional advice Implement a new computer system Assist management with a new business initiative

14. www.brandeis.edu/controller Process Flow Overview Identify firm/individual to provide services. Department completes Consultant Requisition Form and obtains W-9 ( W-8BEN if non-resident alien) from vendor. Sends both forms to Accounts Payable. Accounts Payable reviews classification if applicable, encumbers amount using a “C” number and notifies department. University approved contract is signed. Work is done; consultant invoices department. Department prepares Non-Employee Payment Form, and attaches signed template contract and invoice. Send to AP for payment.

15. www.brandeis.edu/controller Forms Consultant Requisition Form University Approved Contract Non-Employee Payment Form Tax Forms W-9 (U.S. citizen, or permanent resident) W-8BEN (all non-resident aliens) 9-5-6 Rule Certification Form if here on B-1, B-2, WB or WT visa

16. www.brandeis.edu/controller Consultant Requisition Form

17. www.brandeis.edu/controller Independent Consultant Agreement

18. www.brandeis.edu/controller Non-Employee Payment Form

19. www.brandeis.edu/controller Paying non-resident aliens for work done in the U.S.. Consider regulatory constraints. Automatic withholding of 30% for compensation unless claiming treaty benefits. Permanent residents (green card holder) must have US tax ID and complete W- 9. No withholding required. Identify the employment eligibility of the person in the US by inquiring about their entry visa. Most common visa’s are: J-1, J-2, B-1, B-2, W-B, W-T (requires additional forms/authorizations) H-1B and F-1 not eligible for consultant or honorarium payments but may receive expense reimbursements. H-1B is employer specific. Form W-8BEN is required for all non-resident aliens. Identifies the person as a non-resident alien. Must have a valid social security number or ITIN to claim treaty benefits. Form 8233 must be completed to claim treaty benefits and must be confirmed by the I.R.S. before AP can grant a treaty benefit. May delay payment to individual.

20. www.brandeis.edu/controller Examples Scorpio Sound Tom Stone Robert Campbell David Walker Lisa Bartoloni

21. www.brandeis.edu/controller Questions? Loretta Bemis – Associate Controller x6-8686 lbemis@brandeis.edulbemis@brandeis.edu Ofer Ben-Gai – Assistant Controller x6-4471 obengai@brandeis.eduobengai@brandeis.edu Debbie McQuaid – AP Manager x6-4484 mcquaid@brandeis.edumcquaid@brandeis.edu