Payroll Information
Payment for Personal Services to
Employees and Independent Contractors/Consultants
Payment Procedures
(updated 6/09/2005)

1. Payment to a PSU Employee - Generally
2. Payment to a PSU Employee for Extra Duty
3. Payment to a PSU Employee for Services Provided to Another Regents Institution
4. Payment to an Employee from Another Regents Institution for Services Provided to PSU
5. Payment to an Independent Contractor/Consultant - Generally
6. Payment to an Independent Contractor/Consultant (Nonresident Alien)

Payment Procedure #1 -- Payment to a PSU Employee - Generally

Payment procedure #1 is used to appoint and pay a new employee through payroll. An employee appointed to a temporary position that is not eligible for benefits may be appointed to another temporary position through this process. Contact Human Resource Services (HRS) (x. 4096) for assistance in determining the correct appointment process to use for the initial or subsequent appointments, if needed.

Use payment procedure #2 if a PSU employee who is already appointed to a benefits-eligible position performs extra duties for PSU. Follow payment procedure #3 if a PSU employee is performing services for another Regents Institution. Use payment procedure #4 if the individual to be paid is an employee from another Regents Institution.

Department's Responsibilities:
1. Complete paperwork to appoint the employee as an unclassified, classified or student employee or graduate assistant before the employee's first day at work.
2. Direct the employee to the President's Office, Human Resource Services Office, Student Employment or Graduate Office to complete personnel/payroll paperwork on or before their first day at work.

Employee's Responsibilities:

1. Complete a W-4 Form, I-9 Form and other required personnel/payroll paperwork on or before their first day at work.
2. Pay employee's share of Social Security (6.2%) and Medicare (1.45%) tax through payroll deduction. (May not apply to students, graduate assistants and nonresident aliens.)
3. Report taxable income on appropriate income tax forms, if required.

PSU's Administrative Responsibilities (HRS/Payroll):

1. Withhold federal and state income tax at appropriate rate based on employee's completion of W-4 Form and 8233, if eligible.
2. Withhold employee's share and pay employer's share of Social Security (6.2%) and Medicare (1.45%) tax. (May not apply to students, graduate assistants and nonresident aliens.)
3. Pay Federal Unemployment Tax (.2%). (Does not apply to students, graduate assistants and nonresident aliens.)
4. Pay workers compensation insurance (1.45%).
5. Pay sick leave assessment (0.46%).
6. Issue W-2 and/or 1042-S for calendar year.

Payment Procedure #2 -- Payment to a PSU Employee for Extra Duty

This procedure is generally used to pay a PSU employee for duties performed in addition to the employee's regular, benefits-eligible appointment. Payments are processed through payroll. Contact Administration & Finance (x. 4107) for assistance, if needed.

Department's Responsibilities:

1. Complete an Extra Duty Compensation (EDC) form before employee performs the extra duties.
   • Note: Departments should contact HRS before paying a non-exempt employee on an EDC form. Payments to non-exempt employees may require the payment of overtime compensation.
2. Route the EDC form through the approval process.

This procedure is used when a PSU employee provides services to another Regents Institution. The payment to the employee is processed through PSU's payroll. Contact Business & Fiscal Affairs (x. 4107) for assistance, if needed.

Other Regents Institution's Responsibilities:

1. Obtain written approval from PSU before the PSU employee provides services to the other Regents Institution.
2. Notify the PSU department when services have been completed.

Department's Responsibilities:

1. Complete an Extra Duty Compensation (EDC) form. Attach a copy of the notification from the other Regents Institution that the work has been completed.
2. Route the EDC form through the approval process.

PSU's Administrative Responsibilities (Business & Fiscal Affairs):

1. Assign funding on the EDC form from "other agency overload."
2. Invoice the other Regents Institution for salary and fringe benefits charged after the employee has been paid through PSU's payroll from the EDC form.

Payment Procedure #4 -- Payment to an Employee from Another Regents Institution for Services Provided to PSU

This procedure is used when PSU "hires" an employee from another Regents Institution. The payment to the employee is processed through the other Regents Institution's payroll. Contact Business & Fiscal Affairs (x. 4107) for assistance, if needed.

Department's Responsibilities:

1. Obtain written approval from the individual's Regents Institution before the employee provides services to PSU.
2. If the individual is teaching a class, prepare appropriate paperwork to appoint to an unclassified position.
   • Note the following on the appointment form under Salary Source: "Employee of another Regents Institution." Attach the approval from the Regent's Institution to the appointment paperwork and route through the approval process. (Note: Appointment paperwork may not be required if the individual is providing services other than teaching (i.e. guest speaker). Contact Business & Fiscal Affairs (x. 4107), if needed.
3. Notify the Regents Institution when the service has been completed. This notification authorizes the institution to process payment through their payroll. The Regents Institution will prepare an invoice for the individual's salary and fringe benefits and will send the invoice to the PSU department.
4. Prepare a DPR after the invoice is received from the Regents Institution. Send the DPR to Purchasing, 231 Russ Hall, with the invoice.

PSU's Administrative Responsibilities (Business Office):

After receiving the invoice from the department, process an inter fund to reimburse the Regents Institution.

This procedure is followed after the department has completed the "Employee or Independent Contractor/Consultant Worksheet" and has determined that the individual is an independent contractor/consultant and is either a U.S. citizen or a resident alien. Use payment procedure #6 if the independent contractor/consultant is a nonresident alien.

Department's Responsibilities:

1. Complete the Consultant Agreement.
2. Send the Consultant Agreement to Purchasing, 231 Russ Hall, before the individual provides services to PSU.

Independent Contractor/Consultant's Responsibilities:

1. Track and report taxable income to IRS.
2. Pay estimated income tax, including self-employment tax (for Social Security and Medicare).
3. File an income tax form each year and pay taxes on net earnings.
4. Provide workers compensation insurance, if required.

PSU's Administrative Responsibilities (Business Office):

1. Issue Form 1099 if the independent contractor/consultant is paid more than $600 in a calendar year. (Includes all payments from the State of Kansas.)

Payment Procedure #6 -- Payment to an Independent Contractor/Consultant (Nonresident Alien)

This procedure is followed after the department has completed the "Employee or Independent Contractor/Consultant Worksheet" and has determined that the individual is an independent contractor/consultant and a nonresident alien.

Department's Responsibilities:

1. Complete the Consultant Agreement before the individual provides services to PSU.
2. Verify that the individual has social security number (SSN) or an individual taxpayer identification number (ITIN) before the individual enters the United States or arrives at PSU.
   • Note: ITIN's are nine digit taxpayer identification numbers issued by the IRS only to those individuals who are ineligible to receive a social security number. It is the responsibility of the nonresident alien to make application for a social security number or to make application for an ITIN if they are not eligible for a social security number. To apply for an ITIN, the nonresident alien must submit to the IRS an IRS form W-7 (Application for IRS Individual Taxpayer Identification Number).
3. Coordinate completion of IRS form 8233 (Exemption from Withholding on Compensation for Independent Personal Services of a Nonresident Alien individual) and determination of tax treaty provisions with HRS before the individual provides services to PSU.
   • Note: Independent contractor/consultant payments to nonresident alien individuals are subject to the federal income tax withholding at the rate of 30% and state income tax withholding at the rate of 4.5% unless specifically reduced or excluded by a tax treaty between the United States and the foreign visitor's country of residence. IRS form 8233 is completed by the nonresident alien to claim exclusion or reduction of federal income tax withholding.
4. Send the Consultant Agreement and IRS form 8233 to Purchasing immediately after receiving the 8233 from the individual.
   • Note: The Purchasing Office must submit the completed 8233 within 5 days after the department receives form 8233 from the nonresident alien. Payment to the nonresident alien independent contractor/consultant cannot be made until 10 days after the 8233 is sent to the IRS (see PSU's Administrative Responsibilities, below).

Independent Contractor/Consultant's Responsibilities:

1. Provide a social security number (SSN) or individual taxpayer identification number (ITIN) before providing services to PSU.
2. Track and report taxable income.
3. Pay estimated income tax, including self-employment tax (for social security and Medicare) throughout the year.
4. File income tax form each year and pay taxes on net earnings.
5. Provide workers compensation insurance, if required.

PSU's Administrative Responsibilities (Business Office/Purchasing):

1. Send the completed 8233 to the following address within 5 days of receiving the form from the individual:
   
   Office of the Assistant Commissioner (Intern'l)
   Director, Office of Internat'l District Operations
   Attn: CP:IN:D:C:SS
   950 L'Enfant Plaza South, S.W.
   Washington, DC 20024
   
   
2. Complete DA-120 Payment Voucher and DA-35NRA. Send the DA-120, DA-35NRA and a copy of the 8233 to:
   
   Accounts & Reports
   900 SW Jackson
   Room 355S, LSOB
   Topeka, KS 66612-1220
   
   
3. Withhold federal state income tax at 30% rate and state income tax at 4.5% rate unless specifically reduced or excluded by a tax treaty between the United States and the foreign visitor's country of residence.
4. Issue Form 1042-S (Foreign Person's U.S. Source Income Subject to Withholding) to report all payments in a calendar year.

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Who to Contact

Lauren Werner x. 4096