Non-Service Appointments

Non-service Appointments policy

Functional Owner

Office of the Vice Chancellor for Graduate and Research Education

Executive Sponsor

Vice Chancellor for Finance and Administration

Policy Contact

Office of the Vice Chancellor for Research and Graduate Education-Human Resources and the Office of Postdoctoral Studies

Policy Summary

This policy requires that an accurate determination be made about whether a payment made to an individual qualifies as a service (employment) or non-service (fellowship) payment. If the payment is determined to be non-service, the correct non-service title must also be identified.

Who This Policy Applies To

This policy applies to UW–Madison hiring units, human resources offices, employing or hiring departments, anyone who processes fellowships and/or non-service appointments, or their designee.

Rationale

UW–Madison is responsible for correctly classifying payments made to individuals. Misclassifying non-service payments as service-related payments, or vice versa, may expose UW–Madison and the individuals involved to significant adverse tax consequences and unintended financial aid, benefit, or visa eligibility implications.

Policy Detail

In order to correctly classify and identify fellowship payments and non-service appointments, UW–Madison hiring units, human resources offices, employing or hiring departments, anyone who processes fellowships and/or non-service appointments, or their designee shall conduct a review and analysis of the payment and appointment with the Job Aid Form for Making Service vs. Non-Service Payment Determinations. This form will assist in correctly classifying payments to the individual and correctly identifying the individual’s appointment title. A link to this form appears in the Supporting Tools section of this policy. This form shall be retained pursuant to the applicable Record Retention Schedule. This form shall be made available for inspection and review for purposes of audits by the IRS, audits by the UW–Madison Office of Human Resources, and/or other reasons as allowed by policy, rule, regulation, and/or law.

The Job Aid Form for Making Service vs. Non-Service Payment Determination is intended to assist with making an accurate determination about whether a payment made to an individual qualifies as a fellowship or employment payment and provide guidance in choosing the correct title for a non-service appointment, from available titles within the Student Assistant or Post-Degree Training categories. Input from Research Administrators in order to complete the Job Aid Form may be necessary and appropriate.

Generally, a fellowship, traineeship or scholarship represents payment made to, or for the benefit of, an individual to aid the individual primarily in the pursuit of their own studies or research. These payments must be treated as non-service related income under an appropriate title. If, however, a payment to the individual is primarily for the required performance of teaching, research, or other services for the benefit of the university, it must be treated as employee wages in a service appointment under an “employee” title.

Characteristics of service and non-service appointments include, but are not limited to the following:

Service Related Appointments Non-Service Related Appointments
Service Related Income Non-Service Related Income
Benefits University Primarily Benefits Individual Primarily
Wages/Compensation Fellowship/Scholarship income
Taxed through payroll No taxation through payroll
W-2 Fellowship Letter
Benefits Eligible
Paid via Payroll

Example service and non-service appointments include:

Service Related Appointments Non-Service Related Appointments
Postgraduate Trainee 1-7 X6-NN Postdoctoral Fellow X10NN (ET2)
Research Associate X01NN Postdoctoral Trainee X30NN (ET2)
Research Intern X50NN Adv. Opp. Fellow Y26NN (SA1)
Resident Assistant Y80NN Graduate Intern/Trainee X75NN (ET4)
Lecturer (SA) Y30NN Fellow Y21NN (SA1)*
Program Assistant Y42NN Scholar Y22NN (SA1)*
Project Assistant Y43NN Trainee Y23NN (SA1)
Program Assistant-Grader/Reader Y42NG
Project Assistant-Grader/Reader Y43NG
Research Assistant Y41NN
Teaching Assistant Standard/Senior Y33NN/Y33ND
Undergraduate Assistant Y51NN
Undergraduate Intern Y52NN

*For Fellow Y21NN (SA1) and Scholar Y22NN (SA1): This policy (and the job aid) does not apply when there are one time lump sum scholarship payments which must be paid via payroll on these titles, due to the recipient’s tax status as a nonresident alien.

Consequences for Non-Compliance

UW–Madison is responsible for correctly classifying payments made to individuals. Divisions who fail to comply with this policy may be subject to retraining and/or discipline pursuant to applicable employee policies and procedures. Misclassifying service related payments as non-service related payments, or vice versa, may expose UW–Madison and the individuals involved to significant adverse tax consequences and unintended financial aid, benefit, or visa eligibility implications. For example, a department misclassifying a service related payment as non-service could be responsible for payroll tax withholding (FICA, federal and state income tax) for both the individual and UW–Madison, typically equal to more than 40% of the amount paid. Conversely, if a department misclassifies a non-service payment as a service payment, both the individual and UW–Madison would be required to make unnecessary FICA tax payments totaling approximately 15% of the amount paid.

Supporting Tools

Job Aid Form

Definitions

Service Related Income: Employment payment, compensation for work performed in service to the university. Income is contingent upon an activity or employee position (e.g. Project Assistant, Research Associate, Teaching Assistant, etc.).

Non-service Related Income: Income with no work requirement; related to a non-service appointment (e.g. Fellow, Scholar, Trainee). Payment of the funds is not dependent on work or service to the university performed by the recipient.

Responsibilities

UW–Madison hiring units, human resources offices, employing or hiring departments, anyone who processes fellowships and/or non-service appointments, or their designee shall conduct a review and analysis of any proposed non-service appointment payment by using the Job Aid Form for Making Service vs. Non-Service Payment Determinations available with this policy. Completion of this form will assist with correctly classifying payments and identifying non-service appointments. This form shall be retained pursuant to the applicable Record Retention Schedule. This form shall be made available for inspection and review for purposes of audits by the IRS, audits by the UW–Madison Office of Human Resources, and/or other reasons as allowed by policy, rule, regulation, and/or law.

If assistance is needed in order to review and analyze a payment and/or a non-service appointment beyond use of the Job Aid Form described above, hiring units, human resources offices, employing or hiring departments, and anyone who processes fellowships or non-service appointments or their designee are encouraged to contact and work with Department or Division level Research Administrators or Division HR Staff who can answer questions about the appointments and issues related to funding. The Office of the Vice Chancellor for Research and Graduate Education-Human Resources is available to answer questions regarding Student Assistant appointments. The Office of Postdoctoral Studies is available for questions about postdoctoral appointments.

Link to Current Policy

Links to Related Policies

Student Assistant Appointments and Titles

Post Degree Training Appointments and Titles

Fellowships

Assistantships

Appendix2 – Payroll Benefits

SYS 235 Attachment 7: Requirements for Payments to Nonresident Aliens (Account Code 5714)




Keywords:non-service, benefits, fellowship, payroll, scholarship, trainee, scholar   Doc ID:87302
Owner:OHR .Group:HR Policies
Created:2018-10-29 10:46 CSTUpdated:2018-11-21 15:42 CST
Sites:HR Policies, VCRGE and Graduate School
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