Back to Top
Business and Financial Policies and Procedures

Payments to Human Subjects – Printer Friendly Version

This page contains the Payments to Human Subjects pages on one printer-friendly page. To print, click the Print button Print webpage above, on the top-right of this page or use your browser's Print function.


Payments to Human Subjects

Policy Statement

The University of Illinois System often conducts research projects that involve the use of human subjects. When human subjects are offered financial incentives to participate in research, they are paid in the form of cash/cash equivalents to participate. All human subject payments must be made in compliance with an approved IRB Protocol.

Human subject payments may be paid in the form of cash, cash equivalent (such as gift cards/certificates/electronic-codes), or check depending on the circumstances of the study and the dollar amounts involved. In the event that a good or service is provided in exchange for or as a requirement to participate in a research study, the taxability of the good or service will depend on IRS tax reporting requirements.

Personal funds cannot be used for payments to human subjects. Risks of allowing the use of personal funds include non-compliance with tax reporting rules, and payments before official approval of Institutional Review Board (IRB) protocols.

All human subject payments must be processed using account code 141200 unless the payment is to a nonresident alien. Human subject payments to a nonresident aliens (as defined in 18.2 Foreign Nationals) must be processed using account code 215985.

The Internal Revenue Service (IRS) requires tax reporting for human subject payments.

Reason for the Policy

Federal tax and immigration laws require compliance with the rules and regulations pertaining to processing compensation for participants in human subject studies. Failure to comply with these procedures may result in a violation of Federal Law.

Applicability of the Policy

This policy is applicable when providing payments to human subjects for participation in research, regardless of the funding source.

18.10 Human Subject Payments and IRS Reporting Requirements

Note: This policy is intended for the purpose of informing employees and other University of Illinois System-related individuals about relevant tax issues. This policy does not constitute legal or tax advice. Individuals should consult with their attorneys or tax professionals for advice on personal issues.

Human Subject Payments to U.S. Citizens, Resident Aliens, and Permanent Residents 

The IRS requires reporting on human subjects payments when they exceed certain amounts. The University of Illinois System is required to request the human subject's Taxpayer Identification Number (TIN), in order to fulfill its tax reporting responsibilities with the IRS if payments total $600 or greater during a calendar year. The System reports these payments to the IRS on a 1099-MISC, Miscellaneous Income form. The principal investigator must provide University Payables (UPAY) with the TIN for individuals identified in this policy for tax reporting purposes. The principal investigator and UPAY must keep the TINs collected as confidential.

When a human subject is paid a single payment which is greater than $200 or at the time cumulative payments for a calendar year exceed $200, it is the System’s policy to obtain tax identification information from the human subject. This is required because a human subject may participate in several studies and receive payments with a cumulative value equal to or greater than $600, which would require reporting of these payments on IRS Form 1099-MISC. To obtain tax identification information from a human subject, the human subject should be presented with both an IRS W-9 form and W-8BEN form. It is the human subject’s responsibility to determine which form applies based on their tax reporting status. The System cannot provide tax advice to human subjects.

Human Subject Payments to Nonresident Aliens

Researchers are not required to inquire about an individual’s tax reporting status to participate as a human subject; however, if it is known that an individual is a nonresident alien or the System has reason to know that an individual is a nonresident alien, payments must be processed in accordance with this section.

Payments to human subjects that are known to be nonresident aliens, or payments to human subjects the System has a reason to know the individual is a nonresident alien, must meet IRS tax reporting requirements. The confidential nature of a study does not exempt the System from the IRS tax reporting requirements identified in this section. A nonresident alien is an individual who is not a U.S. citizen or a resident alien. A resident of a foreign country under the residence article of an income tax treaty is a nonresident alien individual for purposes of withholding.

All payments to human subjects who are nonresident aliens, regardless of the amount, are required to be reported to the IRS on Form 1042-S, Foreign Person’s U.S. Source Income Subject to Withholding. The System is required to report these payments when it is known or the System has reason to know that a human subject is a nonresident alien pursuant to 26 U.S.C. § 1441.

It is known or the System would have reason to know that a human subject is a nonresident alien through one or more of the following four manners:

  1. The IRB protocol’s inclusion criteria requires that human subjects be nonresident aliens;
  2. The human subject self-identifies as a nonresident alien;
  3. The research being conducted provides information which identifies the human subject as a nonresident alien; or,
  4. The System has other information available to know or have reason to know that the human subject is a nonresident alien.

Prior to making a payment to a human subject who is known or who the System has reason to know to be a nonresident alien, the System must request a completed IRS Form W-8BEN. IRS Form W-8BEN includes the human subject’s full/legal name, tax identification number, and address.

The Federal rate of 30% and State rate of 4.95% will be withheld for all payments to nonresident aliens unless a U.S. Tax Treaty applies.

If an individual’s payment is subject to a U.S. Tax Treaty, the payment may be exempt from or have a reduced withholding. Nonresident aliens may request an exemption to this withholding based on a tax treaty. The following must be submitted to University Payroll and Benefits (UPB) prior to a payment being made:

UPB will review this information and make a determination whether or not a U.S. Tax Treaty applies and adjust the withholding accordingly.

UPB is responsible for maintaining the information required to prepare IRS Form 1042-S for tax purposes. Due to the IRS tax withholding requirements identified in this section, payments to nonresident aliens must be made via check through UPB. Payments cannot be made with cash or cash equivalents (gift cards, certificates, codes, etc.). The information captured on Form 1042-S, is singularly provided for each individual payment to the IRS, as required by law.

UPB may be contacted with questions at:
Chicago 312-996-7200
Springfield 217-206-7211
Urbana-Champaign 217-265-6363

See 18.2 Foreign Nationals, and the Award, Prize and Human Subject Payments, for additional information.

Human Subject Payments to Employees

Payments made to human subjects who are also employees are treated the same as payments for human subjects which are not employees unless an employer/employee relationship exists within the study or participants are limited to employees only. In such rare cases, payments are reported on Form W-2, Wage and Tax Statement and subject to income tax and Medicare withholdings. For additional information regarding independent contractors versus employees, see 17.2 Classification of Independent Contractors Versus Employees. For payments to employees who are nonresident aliens, see above. When making a human subject payment to an employee that requires tax reporting, a University Identification Number (UIN) is an allowable replacement to a social security number, or individual’s tax identification number. Payment requests must be made through and approved in PARIS. Indicate the reason as “additional Time Worked/Pay”; enter Earn Code “HSE”; and add a comment identifying the amount to be paid and “Human Subject Payment”.

Payments to Human Subjects Without Tax Reporting Information

If a human subject is requested to provide information for tax reporting purposes and he/she refuses to or is unable to, payments to the human subject will be subject to the IRS Presumption Rules. Specifically, all payments to the individual will be subject to the IRS backup withholding of 28% unless the human subject is known to be a nonresident alien or the System has reason to know the individual is a nonresident alien. If the human subject is known or presumed to be a nonresident alien, then the payment will be reported on IRS Form 1042-S and subject to the Federal rate of 30% and State rate of 4.95% will be withheld as explained in the Human Subject Payments to Nonresident Aliens section.

Human Subject Payments in the Form of a Good or Service

If a good or service which is purchased by the System is required for participation in a research study, the fair market value (at the time the good or service is provided to the human subject) may be reportable for tax purposes if the good or service is unrestricted for use by the human subject outside of the research study. The fair market value of a good (at the time it is provided to the human subject) is also taxable if the ownership of the good will remain with the human subject at the end of the study.

If the good or service is provided in exchange for the human subject’s participation in a study, the fair market value of the good or service is subject to reporting for tax purposes.

When goods or services provided to a human subject have a fair market value exceeding $200 in a calendar year, the fair market value of the good or service at the time it is provided to the human subject must be reported following the requirements in 8 Payments and Reimbursements – Tax Implications for Payments.

Collection of Tax Identification Numbers from Human Subjects

When collection of tax identification information is required under this policy, it must be kept confidential. Confidential tax identification information includes, but is not limited to the following:

This information must be collected in compliance with 19 Business Systems Access and Security - Social Security Numbers

Payments to Human Subjects Procedures

Open a Program Advance to Pay Human Subjects in Cash or Cash Equivalents
Reconciliation of a Program Advance
Replenish a Program Advance to Pay Human Subjects
Close a Program Advance to Pay Human Subjects
Partial Close of a Program Advance to Pay Human Subjects
Request Checks Made Payable to Human Subjects

Additional Resources

Urbana-Champaign: Office for the Protection of Research Subjects
Chicago: Office of the Vice Chancellor for Research
Springfield: Grants, Contracts and Research Administration
Payments to Human Subjects Flowchart (updates in process)

Last Updated: November 15, 2017 | Approved: Senior Associate Vice President for Business and Finance | Effective: November 15, 2017

Open a Program Advance to Pay Human Subjects in Cash or Cash Equivalents

Policy Statement

Cash or cash equivalents used to pay human subjects must be obtained or purchased using a program advance issued in the name of the principal investigator or designee responsible for the program. This individual is the custodian of the advance. All employee groups are eligible to be custodians except undergraduate students, unpaid graduate students, hourly graduate students, extra help, and academic hourly. In the event the custodian is a non-resident alien, there may be additional tax reporting requirements if the program advance is not reconciled or closed in a timely manner.

A single cash or cash equivalent payment to a human subject in research studies may not exceed $200.

A program advance custodian may have only one outstanding program advance per Institutional Review Board protocol. No single program advance can exceed $10,000. No program advance may remain open for longer than 18 months. A program advance request must include the proposed start and end date of the study.

The custodian is personally responsible for safeguarding program advances and cannot allow the funds to be improperly used. If the program advance custodian failed to safeguard the advance or allowed it to be improperly used, the custodian must repay the money. If the loss was beyond the custodian's control, it may be repaid from the unit's budget or other available operating funds. In the event an advance is stolen, contact your campus police or local law enforcement immediately.

A program advance can only be used to provide cash payments or purchase cash equivalents (such as gift cards/certificates/electronic-codes) which will be provided to human subjects in exchange for their participation in an IRB approved research study. A program advance cannot be used to purchase goods or services to support a research study. Purchases of goods or services to support a research study (including the purchase of a good or service provided to human subjects in exchange for their participation in a study or required for their participation in a study) must be made under an allowable purchase method defined in 7 Purchasing.

Procedure

To open a program advance to pay human subjects in cash or cash equivalent:

  1. Plan ahead. Processing a request can take 48 to 72 hours. Estimate how much you will need for the first 60 days of the study. If additional funds are needed after that, consult Replenish a Program Advance to Pay Human Subjects.
  2. Log in to TEM (Travel and Expense Management System). In the Create New area, select the Expense Report icon. If you need help identifying the icon, consult the job aid for System Navigation.
  3. In the Document Header screen, begin your Report Title with “ADV” so University Payables (UPAY) can expedite processing. Select “Advances” from the drop-down list in the Purpose field. Advances normally issue via ACH (direct deposit) to the custodian’s bank account.
If due to a specific business need the advance should be issued via check, select which University Student Financial Services and Cashier Operations (USFSCO) office you want to pick up the check from the drop-down list in the Special Handling field of the Document Header screen. The specific business need must be documented in the expense report notes. If specific denominations are needed, please specify that in the expense report notes as well. Please note: Payments issued via check may require an additional 3 business days to process.
  1. Enter the expense report number (for example, ER00001234) in the Vendor Invoice #/Ref# field.
  2. Proceed through the screens. For step-by-step instructions, consult the job aid Open and Close a Program Advance.
  3. UPAY processes the payment request.

If payment is made via check, USFSCO prints a check payable to the custodian and contacts the custodian when the check is ready. To pick up the check, go in person to USFSCO Cashier Operations and present your University i-card. They will then cash the check so you can pay the human subjects or purchase gift cards.

Reconciliation of a Program Advance
Replenish a Program Advance to Pay Human Subjects
Close a Program Advance to Pay Human Subjects
Partial Close of a Program Advance to Pay Human Subjects

TEM Resource Page
Job aid for System Navigation
Job aid for Open and Close a Program Advance
Job aid for Create an Expense Report (ER)
Payments to Foreign Nationals
Award, Prize, and Human Subject Payments
University Payables Training Materials
Campus USFSCO office locations and hours:
   Urbana
   Chicago

Last Updated: November 15, 2017 | Approved: Senior Associate Vice President for Business and Finance | Effective: November 15, 2017

Reconciliation of a Program Advance

Policy Statement

A reconciliation of a program advance tracks the disbursements of funds for accountability and tax reporting purposes. A reconciliation occurs when a program advance is either:

  • Replenished;
  • Verification of Non-Use of Funds;
  • Partially Closed; or,
  • Closed

A program advance must be reconciled at least every 90 days from the advance start-date or last reconciliation date to meet fiscal and calendar year tax reporting requirements; however, OBFS recommends monthly reconciliation.

When a program advance is not closed within 90 days of the closing of the study or within 90 days of the advance end-date (whichever is sooner), the unreconciled portion of the advance may be reported as taxable income to the custodian in accordance with IRS regulations and may also be deducted from the employee’s wages or subject to collection.

A program advance that is not in compliance may be suspended and cannot be replenished. Failure to close or reconcile a program advance, as required above, may result in an employee not being allowed future advances.

Procedure

Program advances are not required to be closed and then reopened to meet fiscal and calendar year reporting requirements unless a study exceeds 18 months. Custodians should always attempt to reconcile as promptly as possible, observing the minimum reconciliation standards described above.

Open a Program Advance to Pay Human Subjects in Cash or Cash Equivalents
Replenish a Program Advance to Pay Human Subjects
Close a Program Advance to Pay Human Subjects
Partial Close of a Program Advance to Pay Human Subjects

Last Updated: November 15, 2017 | Approved: Senior Associate Vice President for Business and Finance | Effective: November 15, 2017

Replenish a Program Advance to Pay Human Subjects

Policy Statement

Before you begin the procedure, it is the custodian’s and business manager’s responsibility to become familiar with additional policies related to this topic.

Procedure

To replenish a human subjects advance:

  1. Gather receipts or other documentation for the money already given to human subjects.
  2. Log in to TEM. In the Create New area, select the Expense Report icon. Consult the job aid System Navigation if you need help identifying the icon.
  3. In the Document Header screen, begin your Report Title with "ADVR" so University Payables (UPAY) can expedite processing. Select "Employee Misc. Expense Reimbursement" from the drop-down list in the Purpose field.
If due to a specific business need the advance should be issued via check, select which University Student Financial Services and Cashier Operations (USFSCO) office you want to pick up the check from the drop-down list in the Special Handling field of the Document Header screen. The specific business need must be documented in the expense report notes. If specific denominations are needed, please specify that in the expense report notes as well. Please note: Payments issued via check may require an additional 3 business days to process.
  1. Proceed through the screens. For step-by-step instructions, including how to indicate direct deposit or cash, consult the job aid Replenish a Program Advance.
  2. UPAY reviews the request and processes for payment.

Related Policies and Procedures

Open a Program Advance to Pay Human Subjects in Cash or Cash Equivalents
Reconciliation of a Program Advance
Close a Program Advance to Pay Human Subjects
Partial Close of a Program Advance to Pay Human Subjects

Additional Resources

TEM Resource Page
Job aid for System Navigation
Job aid for Open and Close a Program Advance
Job aid for Create an Expense Report (ER)
Job aid for Replenish a Program Advance
University Payables Training Materials
Campus USFSCO office locations and hours:
    Urbana
    Chicago

Last Updated: November 15, 2017 | Approved: Senior Associate Vice President for Business and Finance | Effective: November 15, 2017

Close a Program Advance to Pay Human Subjects

Policy Statement

Before you begin the procedure, it is the custodian’s and business manager’s responsibility to become familiar with additional policies related to this topic.

Procedure

To close a human subjects advance:

If there is CASH OR CHECKS to be returned

  1. Complete a Travel or Program Advance Closure form. 
  2. Return the cash or check to your campus University Student Financial Services and Cashiers Office (USFSCO) with the completed Travel or Program Advance Closure form. Keep the deposit receipt to submit in TEM (Travel and Expense Management System).
Do not send cash or checks directly to University Payables (UPAY).
  1. Log in to TEM. In the Create New area, select the Expense Report icon. Consult the job aid for System Navigation if you need help identifying the icon.
  2. Proceed through the screens. For step-by-step instructions, including how to submit documentation that details how the cash was spent, consult "To Clear the Advance" in the job aid Open and Close a Program Advance.
  3. UPAY reviews the expense report to ensure the funds were spent in accordance with University policy.
If there is NO CASH to be returned
    Follow steps 3 and 4 above.

Travel or Program Advance Closure

Open a Program Advance to Pay Human Subjects in Cash or Cash Equivalents
Reconciliation of a Program Advance
Replenish a Program Advance to Pay Human Subjects
Partial Close of a Program Advance to Pay Human Subjects
Request Checks Made Payable to Human Subjects

TEM Resource Page
Job aid for System Navigation
Job aid for Open and Close a Program Advance
Job aid for Create an Expense Report (ER)
University Payables Training Materials
Campus USFSCO office locations and hours:
    Urbana
    Chicago

Last Updated: November 15, 2017 | Approved: Senior Associate Vice President for Business and Finance | Effective: November 15, 2017

Partial Close of a Program Advance to Pay Human Subjects

Policy Statement

Before you begin the procedure, it is the custodian's and business manager's responsibility to become familiar with additional policies related to this topic.

Procedure

To partial close a human subject advance:

  1. Log in to TEM. In the Create New area, select the Expense Report icon. Consult the job aid for System Navigation if you need help identifying the icon.
  2. Proceed through the screens. For step-by-step instructions, including how to submit documentation that details how the cash was spent, consult “To Clear the Advance” in the job aid Open and Close a Program Advance.
  3. UPAY reviews the expense report to ensure the funds were spent in accordance with policy.

Open a Program Advance to Pay Human Subjects in Cash or Cash Equivalents
Reconciliation of a Program Advance
Replenish a Program Advance to Pay Human Subjects
Close a Program Advance to Pay Human Subjects
Request Checks Made Payable to Human Subjects

TEM Resource Page
Job aid for System Navigation
Job aid for Open and Close a Program Advance
Job aid for Create an Expense Report (ER)
University Payables Training Materials
Campus USFSCO office locations and hours:
    Urbana
    Chicago

Last Updated: November 15, 2017 | Approved: Senior Associate Vice President for Business and Finance | Effective: November 15, 2017

Request Checks Made Payable to Human Subjects

Policy Statement

Payments to human subjects must be issued in the form of a check when:

  • A single payment to a human subject is $200 or more
    OR
  • Payments must be mailed

Procedure

This procedure requires a separate Travel Expense Management System (TEM) Expense Report for each human subject.

To request checks made payable to human subjects:

  1. Confirm the recipient is a U.S. citizen, permanent resident, or resident alien. If they are not, consult Award, Prize, and Human Subject Payments.
  2. Determine whether the recipient has a Banner vendor number. For step-by-step instructions, consult the Banner Vendor ID and Address Query job aid.
If the recipient does not have a Banner vendor number and the cumulative amount to be paid to them for the study for the calendar year is $200 or more, setup the recipient as a vendor as outlined in Set Up a New Vendor ID in Banner, and proceed to Step #3.

If the recipient has a Banner vendor number, proceed to Step #3.
  1. Log in to TEM (Travel and Expense Management System). In the Create New area, select the Expense Report icon. Consult the job aid for System Navigation if you need help identifying the icon.
Create a separate Expense Report for each human subject.
  1. In the Document Header screen, if the recipient will receive:
  • Less than $200 in the calendar year, select “Temp Vendor Payment” from the drop-down list in the Purpose field.
  • $200 or more in the calendar year, select “Misc. Payment-Vendors, Non-Employees, and Students” from the drop-down list in the Purpose field.
  1. Proceed through the screens. Select “141200-human subjects” from the drop-down list in the Expense Type field. Consult the Miscellaneous or One-Time Vendor Payments job aid for step-by-step instructions. Note, payments to non-resident aliens must be requested through University Payroll and Benefits.
  2. After review and approval by UPAY, the check is processed and mailed to the recipient.

Set up a New Vendor ID in Banner
Update a Vendor ID in Banner
Submit 50 or More Payment Requests
Open a Program Advance to Pay Human Subjects in Cash or Cash Equivalents
Reconciliation of a Program Advance
Replenish a Program Advance to Pay Human Subjects
Close a Program Advance to Pay Human Subjects
Partial Close of a Program Advance to Pay Human Subjects

TEM Resource Page
Job aid for System Navigation
Job aid for Open and Close a Program Advance
Job aid for Create an Expense Report (ER)
Job aid for Banner Vendor ID and Address Query
Job Aid for Miscellaneous or One-Time Vendor Payments
Payments to Foreign Nationals
Foreign Nationals Payment Eligibility Grid
Award, Prize, and Human Subject Payments
University Payables Training Materials
Campus USFSCO office locations and hours:
   Urbana
   Chicago

Last Updated: November 15, 2017 | Approved: Senior Associate Vice President for Business and Finance | Effective: November 15, 2017