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Business and Financial Policies and Procedures

Tax Implications for Payments

Payments to Non-University of Illinois Employees

The University must keep track of gifts, prizes, awards, and other reportable benefits given to non-University employees to ensure proper IRS 1099-MISC reporting.

If payment is not requested directly to the recipient via the TEM system then the unit presenting the gift, prize, award, or other reportable benefit, must report payments equal to or greater than $100 by email using the Protected Email Attachment Application (PEAR) system.

The PEAR email must include the dollar value, along with the recipient's name, address and Taxpayer Identification Number (TIN). For security purposes, this information is sent through PEAR to the group UPAY1099 (in PEAR, the name of this group will appear as "UPAY1099.PearApplication.aits.uillinois.").

If you are unfamiliar with using PEAR, consult the following resources for information and instructions:

To submit reportable benefits to more than five individuals, contact and request a spreadsheet template to be used for submission.

Payments to University of Illinois Employees

Consult "Gifts, Prizes, and Awards" in Section 18.5, Fringe Benefits for additional tax requirements and information.

Tax Obligations for Payments to Spouses, Dependents, or Guests

Payments for expenses, such as lodging, meals, and transportation of a University employee's spouse, dependent, or guest are generally considered taxable income to the employee and are only approved in extraordinary circumstances. If payment is approved, UPAY reports the amount to University Payroll and Benefits for withholding of applicable taxes from the employee's next payroll payment. The amount is included as taxable income on the employee's Form W-2.

A spouse, dependent, or guest's travel or other University business-related expenses are not treated as taxable income if they incur these expenses on behalf of the University when providing substantial services on a volunteer basis in support of the University's primary missions.

See OBFS Section 18 - Taxes for additional tax reporting information and obligations

Last Updated: August 5, 2016 | Approved: Senior Associate Vice President for Business and Finance | Effective: September 2012

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