1099 Compliance for US vendors
Note to vendors:
The 1099-MISC tax form is issued by Jan 31st each year to providers of services (not merchandise) with at least $600 in annual billing to New Mexico Tech. If you have questions on the tax form you received please contact the Accounts Payable department manager.
The NMT vendor form acts as a substitute W-9 form. Use the Vendor form and the optional Order Confirmation form when hiring vendors to provide a service with an engagement cost less than $5,000. (The Contract for Professional Svcs form was cancelled in 2013). Those forms are available on the Purchasing Services web page: http://www.nmt.edu/purchasing-services . The vendor is required to issue an invoice to NMT before payment can be made.
The Employee vs Independent Contractor Test: The federal government has provided guidelines to determine whether the individual's relationship with NMT should be classified as an employer - employee relationship or a vendor relationship. Details are provided in IRS publication 1779 found on http://www.irs.gov/ . The guideline is implemented at NMT through specific questions that the vendors answer on the Vendor form. Review of the answers is done by PUrchasing, with escalations to the Federal Tax Compliance mgr when needed.
The Accounts Payable department procedures describes the process for paying an honorarium to individuals or entities: Honorarium Procedures.
When the visitor is a foreigner, the Foreign National Data Sheet for Visitors must be completed and submitted to the federal tax compliance manager for the resident alien/non-resident alien tax classification process : Foreign National Data Sheet for Visitors
Artists From Abroad
Foreign artists are subject to specific IRS regulations on tax withholding, and also are required to complete the standard Foreign Vendors forms listed in the 'foreign vendor compliance' section below.
The federal tax procedures for artists from abroad are described here: NRA Procedures for Performers
Foreign Vendor Income Tax Compliance
The foreign vendor is required by IRS regulations to complete additional forms before Tech will process payments for software licenses or services performed in the US. Please review this explanation of Tech's procedures and a summary of the IRS regulations: Non Resident Alien Vendor Compliance .
Contact the Federal Tax Compliance Manage with questions on whether we will withhold income tax from the payment being made to the vendor. In general, purchase of goods is not a taxable event. But the purchase of software licenses, and a payment for services is a taxable event. The vendor form is used to determine if the vendor is eligible to claim a tax treaty benefit based on their country and the form of business entity (individual, corporation, etc) and avoid tax withholding. The IRS W8 form is required, with a US tax ID, to receive treaty benefits. Taxes withheld by Tech are remitted to the IRS, and the vendor is sent a 1042-S form at year end.
The various W-8 forms are found on the IRS web site, and will be provided to the vendor by Tech's Purchasing department. The vendor shall determine whether to claim a tax treaty benefit, and shall also complete the standard NMIMT vendor registration form before payments can be processed.
Guide for nonresident alien determination :Link to IRS web site
Additional data collection may be required from the foreign vendor via this form: Foreign National Data Sheet for Visitors