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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, [email protected]
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) 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
Documentation should be included with either the AP Check Requisition or Treasury EFT request
Subject to U.S. income tax reporting and withholding Not 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:http://www.luc.edu/finance/Pmts_NonResAlien.shtml
Foreign National Independent Contractor Form: http://www.luc.edu/media/lucedu/finance/pdfs/FNIF_Indpt_Cont.pdf
Form W-8BEN (Individuals)http://www.irs.gov/pub/irs-pdf/fw8ben.pdf
Form W-8BEN-E (Entities)http://www.irs.gov/pub/irs-pdf/fw8bene.pdf
TAX RESOURCES
Contact Information:Sales Tax Foreign Vendor PaymentsBrigid Smith Maria [email protected] [email protected](312)915-8717 (312)915-8777
QUESTIONS?
