January 25, 1999
Volume 51, No. 17
New IRS advisory benefits international visitors, hosts
Until a few months ago, international visitors coming to the Emory campus as short-term guest lecturers had several difficult choices facing them regarding tax and visa status, travel reimbursements and the ability to accept honoraria for their work. In countries without reciprocal tax treaties with the United States--a category that includes a large number of nations around the globe--international visitors and their would-be hosts have traditionally faced a cumbersome, months-long process.
To get paid as professor in residence at Emory for a week in April, for example, an invited scholar from Nigeria would have to apply for and receive a J-1 visa months before, get a U.S. Social Security or Individual Tax Identification number, and then pay taxes on both the honorarium and travel reimbursements. A quicker visa, the B-1, would prohibit him from receiving payment--allowing only travel reimbursements (taxable ones, at that)--for his stay.
However, a long-awaited IRS advisory issued in December 1998 has effected at least a partial change in these requirements. The change means that host institutions will enjoy significant savings over previous years in bringing in international visitors, while the visitors themselves will enjoy less burdensome and time-consuming paperwork resulting from their U.S. visits.
In brief, the new advisory exempts international visitors holding a B-1 (business) or J-1 visa from having to pay federal income tax on reimbursements for travel and related expenses when they visit American universities for short-term stays. According to the December announcement, nonresident aliens (the IRS term for internationals who are not staying "permanently") may use the "accountable plan rules" for travel reimbursements, just as resident Emory faculty and staff and other U.S. business travelers do. Original receipts must accompany the reimbursement request, which must be filed on Form 4 for international visitors.
The result is an aggregate 43 percent savings per visit for each department or unit hosting an international guest. Previously, academic departments wanting to make sure their visitors received 100 percent reimbursement for out-of-pocket costs had to "gross up" travel reimbursements by 43 percent to compensate for the visitor's expected U.S. tax liability. Under the new rule such "over-reimbursement" for travel expenses is no longer appropriate, and neither tax reporting nor tax withholding is required. Since most international visitors to Emory have airfare and travel expenses in excess of $1,000--and the University welcomes several hundred such visitors each year--this single accounting change will save departments and units a substantial sum of money.
Although both J-1 and B-1 visitors have previously been able to accept travel reimbursements (with proper tax ID and withholding), B-1 visitors have long been specifically prohibited from accepting honoraria for short-term assignments. This honoraria restriction--a matter of intensive lobbying over the years by the U.S. educational establishment--is currently undergoing reevaluation under the terms of the 1998 Omnibus Budget Act; more information is expected on the act's ramifications regarding international visitors within the next few weeks.
The controller's office, International Student and Scholar Programs (which deals with visa issues) and the Office of International Affairs are working closely together to assist departmental representatives charged with making arrangements for international visitors. Each of these offices can be contacted for up-to-date details on the evolving situation.
Further information on the University's travel reimbursement procedures--now applicable in full to international visitors as well--may be found in the University's Travel and Expense Reporting Policies and Procedures manual, available from Accounts Payable.
"International Affairs" is a periodic column sponsored by
the Office of International Affairs.