Since some non-residents are prohibited from working in the U.S. and/or being paid compensation, it is imperative that you contact our office as soon as you are aware that you will be paying a non-U.S. Citizen, even for reimbursement of expenses. We require all visitors to complete a Foreign National Information Form to assist our office in researching the payment. The information on this form will help us to determine whether payment is legal, and if so, which IRS forms must be completed (in general, Form W-8BEN, Form 8233 - if applicable - and Form W-7 if the person needs a U.S. Individual Taxpayer Identification Number.) We must have a social security number or a U.S. Individual Taxpayer Identification Number before a check can be issued.
Please be aware that if we are making a payment to a U.S. person, but we know this person is receiving the payment as an agent of a foreign person, we must treat the payment as being made to the foreign person, and follow all the applicable procedures.
In general, we must withhold tax of 30% unless a tax treaty exists between the United States and the recipient’s country of residence. (This 30% tax is in addition to the North Carolina 4% personal services tax, discussed in the Payments to Out of State Vendors and Individual section.) If a person wishes to take advantage of a tax treaty, he or she must complete a Form 8233 and provide it to us in order to avoid withholding. This form must be mailed to the IRS 10 days prior to payment to the individual.
Please contact the Accounts Payable Coordinator at x2206 to obtain the forms, and/or to determine the tax consequences prior to making payment arrangements with these individuals.
If you would like more information on payments to non-U.S. Citizens, please follow this link to Publication 515, Withholding of Tax on Nonresident Aliens and Foreign Corporations.
We have also prepared 3 memos to assist you:
(1) NRA Overview Memo - this gives a brief description of the regulations we must comply with;
(2) NRA Policies and Procedures - this provides a step-by-step list of instructions to follow when paying a non-U.S. citizen;
(3) NRA sample letter - you may tailor this to your department's specific situation.