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100 Non-Sponsored Centralized Accounts Receivable Policy

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Non-sponsored accounts receivable for both internal and external sales is managed centrally in the Division of Business Services (DoBS).

UW-Madison Administrative Policy
Policy # 110
Capital Equipment Policy

Effective Date: June 1, 2020
Last Updated: June 1, 2020
Last Reviewed: June 1, 2020
Next Review: TBD

Functional Owner: Director of Financial Information Management
Executive Sponsor: Asst. Vice Chancellor for Business Services
Policy Contact: Supervisor Central AR for Non-Sponsored Billing, 608-890-1328, Email : uwmsnar@bussvc.wisc.edu

Policy Summary

Non-sponsored accounts receivable for both internal and external sales is managed centrally in the Division of Business Services (DoBS). Departments are responsible for creating accurate, timely billings in the PeopleSoft Shared Financial System (SFS) at the time the goods or services have been provided and not at the time the payment is received. Departments must have appropriate financial internal controls when working with accounts receivable. DoBS will manage invoice generation, adjustments, cancelations, write-offs, collection efforts and payment applications in collaboration with UW-Madison divisions and departments.

This policy is not guidance for grants, tuition or student housing revenues.

Policy Application

The SFS Accounts Receivable and Billing System is currently being rolled out to UW-Madison departments for all non-sponsored accounts receivable, including internal and external customers. The use of SFS for non-sponsored billing and receivables was launched in November of 2018 and will be introduced campus-wide in the coming months/years – unless otherwise agreed upon with the Division of Business Services.

Rationale

To comply with State of Wisconsin DOA accounting manual (07-01), through the centralized timely collection of non-sponsored receivables. To minimize the exposure of uncollectible receivables and to increase the integrity of the financial statements through consolidation of receivables and revenues.

Policy Detail

Departments will upload bills to SFS using a shared customer file. DoBS will generate invoices from the uploaded bills and process all transactions related to the invoices from that point.

The shared customer file will be managed centrally by DoBS. Payment terms will be established and managed centrally.

DoBS is responsible for the collection of non-sponsored receivables in collaboration with UW-Madison divisions and departments as outlined in procedure 100.4. This includes uploading invoices to third party accounts payable companies. Outstanding balances of any non-sponsored receivables may be referred to either a third-party collection agency or the State of Wisconsin’s Department of Revenue. Wisconsin’s Department of Revenue will be used for collection efforts if the DoBS has a Tax-ID for the customer that can be helpful to the DOR. Otherwise the third-party collection agency will be used.

Forms of payment include check, credit card, ACH and Wire transfers. Credit card fees that result from payments on invoices will be charged to the department for that invoice on a monthly basis.

Any adjustments, cancelations or write-offs will be processed centrally and must include valid explanation and documentation as outlined in procedures 100.3 and 100.4. Write-offs of $1,000 or more will require dean or director and DoBS approval and approval from UW System Administration.

It is the responsibility of the department to correctly charge sales tax on bills per the state of Wisconsin sales tax policy.

Supporting Procedures and Templates

Definitions

  1. Bill – A bill is a document created when a sale is made. A bill becomes an invoice when a balance is due. For the purpose of this policy, intra-unit bills (Madison department to Madison department) never become invoices because the bill is paid at the same time the bill is created.
  2. Invoice – A bill becomes an invoice when the bill is delivered to the customer and creates a balance due.
  3. Accounts Receivable – An asset that refers to the amount due from a customer for the sale of goods or services, when the goods or services have been delivered to the customer and payment is not received by the seller.
  4. Accrual Accounting – A basis of accounting that recognizes revenue when earned, and expenses when incurred, regardless of when cash changes hands.
  5. Write off – Write off relevant to this policy means that we cannot collect on the outstanding balance for an invoice. Types of reasons for a write off would include a customer in bankruptcy or deceased, or the debt has reached the age where we can legally no longer attempt to collect payment (statute of limitations).
  6. Cancellation – Canceling an invoice should only be used when an error has been made on the bill. An error can include the incorrect customer, contact or location identified on the bill. A duplicate bill for services already invoiced would be a good reason to cancel the bill.
  7. Adjustment – Adjusting the bill should be reserved for errors in amounts invoiced. Such as charging the wrong rate for a service or the wrong quantity ordered.
  8. Refund – The process of returning money to a customer as a result of overpayment for goods or services.

General Responsibilities

Division Chief Financial Officer (CFO) – Coordinates the designation of billing specialist(s) for their division and provides oversight and support to the billing specialist(s) in execution of their responsibilities.

Accounts Receivable and Billing Manager – Coordinates rollout of AR/BI modules to campus divisions and provides troubleshooting, reporting, analysis and guidance on invoicing and collection efforts.

Accounts Receivable and Billing Accountant – Responsible for the overall processing of Accounts Receivable & Billing assigned to the University of Wisconsin – Madison. Duties include establishing and maintaining a customer database, training, troubleshooting and to ensure accurate accounting and reporting.

Billing Specialist – Responsible for the departmental functions in the AR/BI module in SFS.  Duties include verifying and submitting customer requests as needed, bill generation, and collaborating with the AR/BI Manager and AR/BI Accountant on collection efforts and inquires.

Links to Related Policies

100.1 Shared Customer Procedure

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UW-Madison Non-Sponsored AR and Billing has a shared customer file that is managed centrally by the Division of Business Services (DoBS).

Shared Customer Procedure

Procedure # 100.1
Rev.: 7.1.20
Effective Date: July 1, 2020

Related Policy:Non-Sponsored Centralized Accounts Receivable Policy
Functional Owner: Director of Financial Information Management
Contact: Supervisor Central AR for Non-Sponsored Billing, 608-890-1328, Email: uwmsnar@bussvc.wisc.edu

Contents

I. Procedure Statement
II. Who is Affected by this Procedure
III. Procedure
IV. Related References
V. Revisions

I. Procedure Statement

UW-Madison Non-Sponsored AR and Billing has a shared customer file that is managed centrally by the Division of Business Services (DoBS). Departments can request new internal or external customers by submitting the Customer upload file. Customers can have multiple contacts and locations. Modifications to existing customer information including additional contacts or locations should be requested through the uwmsnar@bussvc.wisc.edu mailbox. DoBS will review each customer request to ensure compliance with export control lists such as OFAC.

II. Who is affected by this Procedure

Any department that is using Billing and Accounts Receivable modules in SFS for invoicing to non-sponsored customers either within the UW-Madison community or externally.

The SFS Accounts Receivable and Billing System is currently being rolled out to UW-Madison departments for all non-sponsored accounts receivable, including internal and external customers. The use of SFS for non-sponsored billing and receivables was launched in November of 2018 and will be introduced campus-wide in the coming months/years – unless otherwise agreed upon with the Division of Business Services.

III. Procedure

The following steps represent the overall process for requesting new customers:

  1. Fill out either the Internal or External customer upload file
  2. If the customer is already set up but a different contact or location is needed, fill out the Customer Update Form
  3. Email to DoBS at: uwmsnar@bussvc.wisc.edu
  4. DoBS will review the customer information and ensure the customer is not on any export control lists such as OFAC.
  5. DoBS will reply via email when customers have been set up.

IV. Related References

VI. Revisions

Procedure Number

 
Date Approved

 

Revision Dates

100.2 Creating a Bill Procedure

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Departments are responsible for entering bills into SFS. The Division of Business Services (DoBS) will generate invoices from the bills entered. Bills can be entered as either one-time or installment. Payment terms generally will be Net30, unless an exception has been approved by DoBS.

Creating a Bill Procedure

Procedure # 100.2
Rev.: 7.1.20
Effective Date: July 1, 2020

Related Policy:Non-Sponsored Centralized Accounts Receivable Policy
Functional Owner: Director of Financial Information Management
Contact: Supervisor Central AR for Non-Sponsored Billing, 608-890-1328, Email: uwmsnar@bussvc.wisc.edu

Contents

I. Procedure Statement
II. Who is Affected by this Procedure
III. Procedure
IV. Definitions
V. Related References
VI. Revisions

I. Procedure Statement

Departments are responsible for entering bills into SFS. The Division of Business Services (DoBS) will generate invoices from the bills entered. Bills can be entered as either one-time or installment. Payment terms generally will be Net30, unless an exception has been approved by DoBS.

II. Who is affected by this Procedure

Any department that sells goods or services for non-sponsored activities should use this procedure.

The SFS Accounts Receivable and Billing System is currently being rolled out to UW-Madison departments for all non-sponsored accounts receivable, including internal and external customers. The use of SFS for non-sponsored billing and receivables was launched in November of 2018 and will be introduced campus-wide in the coming months/years – unless otherwise agreed upon with the Division of Business Services.

III. Procedure

The following steps represent the overall process for creating a bill:

  • Use the bill upload template to import bills
  • Follow the instructions to upload bills

The following journal entries are a sample of what will post when the bills are generated:

Internal customer:

Debit: Buying Department Expense         XXXX
Credit: Selling Department Revenue                      XXXX

External customer:

Debit: Selling Department Accounts Receivable (#6200) XXXX
Credit: Selling Department Revenue                                                   XXXX

IV. Definitions

  1. Bill – A bill is a document created when a sale is made. A bill becomes an invoice when a balance is due. For the purpose of this policy, intra-unit bills (Madison department to Madison department) never become invoices because the bill is paid at the same time the bill is created.
  2. Invoice – A bill becomes an invoice when the bill is delivered to the customer and creates a balance due.

V. Related Resources

VI. Revisions

Procedure Number

 
Date Approved

 

Revision Dates

100.3 Cancelation or Adjustment of an invoice Procedure

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Cancelations and adjustments of open invoices are processed centrally in the Division of Business Services (DoBS). Adjustments and cancelations need to include explanation for the adjustment.

Cancelation or Adjustment of an invoice Procedure

Procedure # 100.3
Rev.: 7.1.20
Effective Date: July 1, 2020

Related Policy:Non-Sponsored Centralized Accounts Receivable Policy
Functional Owner: Director of Financial Information Management
Contact: Supervisor Central AR for Non-Sponsored Billing, 608-890-1328, Email: uwmsnar@bussvc.wisc.edu

Contents

I. Procedure Statement
II. Who is Affected by this Procedure
III. Procedure
IV. Definitions
V. Related References
VI. Revisions

I. Procedure Statement

Cancelations and adjustments of open invoices are processed centrally in the Division of Business Services (DoBS). Adjustments and cancelations need to include explanation for the adjustment. This procedure should not be used to write off a debt. For instructions on how to write off a debt, please refer to “Write off and Collection Procedure”. Please review the definitions section of this procedure to help determine which process to use.

II. Who is affected by this Procedure

Any department that has an invoice outstanding in the SFS AR module and has found an error in the bill.

The SFS Accounts Receivable and Billing System is currently being rolled out to UW-Madison departments for all non-sponsored accounts receivable, including internal and external customers. The use of SFS for non-sponsored billing and receivables was launched in November of 2018 and will be introduced campus-wide in the coming months/years – unless otherwise agreed upon with the Division of Business Services.

III. Procedure

The following steps represent the overall process for requesting a cancelation or adjustment of an invoice:

  • Fill out the Invoice Cancel_Adjust Form including your signature and the signature of the reviewing party for your area.
  • Submit form to DoBS via email to: uwmsnar@bussvc.wisc.edu
  • Adjustments and cancelations over $1,000 need additional review from the Dean or Director and DoBS.
  • DoBS will create a credit memo in SFS. The credit memo will be matched up to the original invoice to correct the balance due. The customer will receive a copy of the credit memo.

The following journal entries are samples of what will post after a cancelation or adjustment is processed:

Internal customer:

Debit: Selling Department Revenue XXXX

Credit: Buying Department Expense        XXXX

External customer:

Debit: Selling Department Revenue XXXX

Credit: Selling Department Accounts Receivable (#6200) XXXX

IV. Definitions

  • Cancellation – Canceling an invoice should only be used when an error has been made on the bill. An error can include the incorrect customer, contact or location identified on the bill. A duplicate bill for services already invoiced would be a good reason to cancel the bill.
  • Adjustment – Adjusting the bill should be reserved for errors in amounts invoiced. Such as charging the wrong rate for a service or the wrong quantity ordered.
  • Write-off – Write off relevant to this policy means that we cannot collect on the outstanding balance for an invoice. Types of reasons for a write off would include a customer in bankruptcy or deceased, or the debt has reached the age where we can legally no longer attempt to collect payment (statute of limitations).

V. Related Resources

VI. Revisions

Procedure Number

 
Date Approved

 

Revision Dates

100.4 Write off and Collection Procedure

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Non-Sponsored receivable balances will be managed centrally by the Division of Business Services

Write off and Collection Procedure

Procedure # 100.4
Rev.: 7.1.20
Effective Date: July 1, 2020

Related Policy:Non-Sponsored Centralized Accounts Receivable Policy
Functional Owner: Director of Financial Information Management
Contact: Supervisor Central AR for Non-Sponsored Billing, 608-890-1328, Email: uwmsnar@bussvc.wisc.edu

Contents

I. Procedure Statement
II. Who is Affected by this Procedure
III. Procedure
IV. Definitions
V. Related References
VI. Revisions

I. Procedure Statement (Non-Sponsored receivable balances will be managed centrally by the Division of Business Services.)

Once an invoice is generated the customer will receive a monthly statement. If payment is not received, the customer will receive dunning letters each month after the due date. Once the invoice reaches 90 days past due, write offs and collection activities will be managed centrally by the Division of Business Services (DoBS) in collaboration with UW-Madison divisions and departments. Write off and collection activities need to be processed timely to ensure responsible stewardship of UW-Madison resources.

Write offs and collection activities are only for External customers. All intra-unit invoices are paid immediately so no collection activities are needed.

II. Who is affected by this Procedure

Any department that has an invoice outstanding in the SFS AR module and has become a doubtful account.

The SFS Accounts Receivable and Billing System is currently being rolled out to UW-Madison departments for all non-sponsored accounts receivable, including internal and external customers. The use of SFS for non-sponsored billing and receivables was launched in November of 2018 and will be introduced campus-wide in the coming months/years – unless otherwise agreed upon with the Division of Business Services.

III. Procedure

The following steps represent the overall process for collection efforts:

  • Statements will be sent for all outstanding invoices regardless of due date on or around the 15th of the month.
  • Dunning letters (reminder notices) will be issued by DoBS monthly on or around the 15th. Dunning letters will begin after 30 days past due and will continue to be sent until the debt is cleared.
  • At 90 days, DoBS will reach out to the billing department to discuss collections. Decision needs to be made at that time if the invoice should be sent to a collection agency, the state of Wisconsin Department of Revenue or written off. If the department is working with the customer on payment, a note can be placed on the account providing detail on the expected date of resolution.

The following steps represent the overall process for requesting a write off:

  • Write -off transactions are initiated through workflow in SFS. Follow instructions on how to initiate a write-off.
  • Write-offs over $1,000 require Dean or Director and DoBS approval.
  • Write offs must include explanation.

The following journal entry is a sample of what will post after a write off has been processed:

Debit: Selling Department contra-revenue account (#9312) XXXX

Credit: Selling Department accounts receivable account (#6200) XXXX

IV. Definitions

  • Doubtful account – a doubtful account refers to outstanding balances that we do not expect to be paid. Typically, a doubtful account takes many things into consideration such as age of the invoice, ability to make contact with the customer or bankruptcy notification.
  • Dunning letter – The word dunning stems from a 17th century word dun which means to demand payment of a debt. Dunning letters are reminder notices that are sent periodically when an accounts receivable balance is past due.
  • Write-off – Write off relevant to this policy means that we cannot collect on the outstanding balance for an invoice. Examples of reasons for a write off would include a customer in bankruptcy or deceased, or the debt has reached the age where we can legally no longer attempt to collect payment (statute of limitations).

 

V. Related Resources

VI. Revisions

Procedure Number

 
Date Approved

 

Revision Dates

100.5 Declined Payment Procedure

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This procedure is for handling customer payments that have been declined for any reason including insufficient funds, closed bank accounts, etc.

Declined Payment Procedure

Procedure # 100.5
Rev.: 7.1.20
Effective Date: July 1, 2020

Related Policy:Non-Sponsored Centralized Accounts Receivable Policy
Functional Owner: Director of Financial Information Management
Contact: Supervisor Central AR for Non-Sponsored Billing, 608-890-1328, Email: uwmsnar@bussvc.wisc.edu

Contents

I. Procedure Statement
II. Who is Affected by this Procedure
III. Procedure
IV. Definitions
V. Related References
VI. Revisions

I. Procedure Statement

This procedure is for handling customer payments that have been declined for any reason including insufficient funds, closed bank accounts, etc.

II. Who is affected by this Procedure

Any department that sells goods or services for non-sponsored activities should use this procedure.

The SFS Accounts Receivable and Billing System is currently being rolled out to UW-Madison departments for all non-sponsored accounts receivable, including internal and external customers. The use of SFS for non-sponsored billing and receivables was launched in November of 2018 and will be introduced campus-wide in the coming months/years – unless otherwise agreed upon with the Division of Business Services (DoBS).

III. Procedure

The following steps represent the overall process for a declined payment:

  • Notification received that a credit card or check payment has been declined.
  • Business Services will reverse the payment in SFS and will reinstate the debt outstanding.
  • Business Services will apply an NSF fee of $25 to the customer account for the declined payment.
  • The customer will receive an updated invoice reflecting the additional fee.
  • The NSF fee will be used to offset the bank fees UWMSN incurs. The NSF fee will not be distributed to the department.

The following journal entries are samples of what will post when a declined payment is posted:

Reverse the payment:

Debit: Selling Departments Accounts Receivable $500.00

Credit: Central funding string for bank transactions          $500.00

Add the NSF fee:

Debit: Selling Departments Accounts Receivable $25.00

Credit: Central funding string for bank fee transactions   $25.00

IV. Definitions

  • Cancellation – Canceling an invoice should only be used when an error has been made on the bill. An error can include the incorrect customer, contact or location identified on the bill. A duplicate bill for services already invoiced would be a good reason to cancel the bill.
  • Adjustment – Adjusting the bill should be reserved for errors in amounts invoiced. Such as charging the wrong rate for a service or the wrong quantity ordered.
  • Refund – The process of returning money to a customer as a result of overpayment for goods or services.
  • NSF – Non-sufficient funds. This term is commonly used for when a credit card or check payment is declined. This could be the result of many different reasons such as insufficient funds or closed bank account.

V. Related Resources

VI. Revisions

Procedure Number

 
Date Approved

 

Revision Dates

100.6 Refunding a payment Procedure

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This procedure for refunding a payment is specifically for transactions that have been processed through centralized Accounts Receivable.

Refunding a Payment Procedure

Procedure # 100.6
Rev.: 7.1.20
Effective Date: July 1, 2020

Related Policy:Non-Sponsored Centralized Accounts Receivable Policy
Functional Owner: Director of Financial Information Management
Contact: Supervisor Central AR for Non-Sponsored Billing, 608-890-1328, Email: uwmsnar@bussvc.wisc.edu

Contents

I. Procedure Statement
II. Who is Affected by this Procedure
III. Procedure
IV. Definitions
V. Related References
VI. Revisions

I. Procedure Statement

This procedure for refunding a payment is specifically for transactions that have been processed through centralized Accounts Receivable. Refunds may become necessary as a result of duplicate or over payments made by customers or adjustments and cancelations of invoices that result in overpayments.

II. Who is affected by this Procedure

Any department that sells goods or services for non-sponsored activities should use this procedure.

The SFS Accounts Receivable and Billing System is currently being rolled out to UW-Madison departments for all non-sponsored accounts receivable, including internal and external customers. The use of SFS for non-sponsored billing and receivables was launched in November of 2018 and will be introduced campus-wide in the coming months/years – unless otherwise agreed upon with the Division of Business Services (DoBS).

III. Procedure

The following steps represent the overall process for requesting a refund:

  • If the refund is a result of an adjustment or cancelation of a bill, clearly indicate on the Cancel_Adjust Form that a refund needs to be processed.
  • Any duplicate payments received by customers will be placed on account for the customer in SFS. DoBS will work collaboratively with departments to determine if the payment needs to be refunded or can be applied to other open invoices.
  • Weekly, DoBS will request refunds to be processed through Accounts payable.

The following journal entry is a sample of what will post when a payment is refunded:

Debit: Selling Department Accounts Receivable (#6200) XXXX

Credit: Central funding string for payments                                      XXXX

IV. Definitions

  • Cancellation – Canceling an invoice should only be used when an error has been made on the bill. An error can include the incorrect customer, contact or location identified on the bill. A duplicate bill for services already invoiced would be a good reason to cancel the bill.
  • Adjustment – Adjusting the bill should be reserved for errors in amounts invoiced. Such as charging the wrong rate for a service or the wrong quantity ordered.
  • Refund – The process of returning money to a customer as a result of overpayment for goods or services.

V. Related Resources

VI. Revisions

Procedure Number

 
Date Approved

 

Revision Dates

101 Payments to Individuals

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The Payment to Individual Report (PIR) is used to request all payments to individual non-employees. In the process of fulfilling their mission to instruct, conduct research, and perform public service, departments within the University of Wisconsin-Madison may find it necessary to pay individuals who are not employed by the university

Policy/Procedure: 101-Payments to Individuals
Date: 06/09/2010 (Last updated: 04/13/2015)

Statement of Policy

The Payment to Individual Report (PIR) is used to request all payments to individual non-employees. In the process of fulfilling their mission to instruct, conduct research, and perform public service, departments within the University of Wisconsin-Madison may find it necessary to pay individuals who are not employed by the university. An individual is defined as “a person who is not a company, partnership, corporation, association, organization, trust or estate, and for whom an employer-employee relationship does not exist.” See UW System Administrative Policy SYS 235: Personal Services Payment for more details. This policy includes paying individual non-employees for goods and services, prizes and awards, fellowships, and scholarships. Travel and expenses are reimbursed separately using e‑Reimbursement

UW-Madison Accounting Services will comply with the rules set forth by the UW-System, Board of Regents and federal government concerning non-salary payments as established in the following documents:

Procedure

I. General Guidelines

The Payment to Individual Report (PIR) is used to request all payments to individuals except salaries, employee reimbursements, and payment to subcontractors and architects. An individual is defined as “a person who is not a company, partnership, corporation, association, organization, trust or estate, and for whom an employer-employee relationship does not exist.” See UW System Administrative Policy SYS 235: Personal Services Payment for more details.

Examples of valid payments processed with a PIR:

  • Direct-charge payments to individuals for services, prizes and awards, scholarships, rents, royalties, and participant support.
  • You may use the PIR to pay a non UW employee for services.
  • You may use the PIR to pay a fee that is less than $100 to a registered UW student.
  • If you are processing scholarship payments to U.S. Residents on Program 9, please review the Automated Departmental Scholarship procedures. Contact your Dean’s Office for further information on this process as each Dean’s Office has a representative in charge of submitting scholarship payments to U.S. Residents on Program 9 using the Automated Departmental Scholarship procedures mentioned above.
  • All payments to an Individual, Sole Proprietorship, Partnership, or Limited Liability Companies (LLC) as described in the 1099-MISC/1042S Tax Reportable Transactions by Account Codes.

Notes:

  1. Fee for services payments over $100.00 to students or any payment to a UW employee must be pay rolled.
  2. Lists are not allowed to be submitted with a PIR effective 02-19-2010.
  3. For non-employees who file for reimbursement of travel costs, please follow the guidelines outlined in Policy 203-Payment for Services and Travel and Expense Reimbursement for Non-employees.
  4. If a transaction is over $5,000, a requisition is required unless the department has delegated authority to do Entertainment Contracts; see Purchasing Policy and Procedure, Entertainers/Speakers/Instructors and Consultant Contacts.
  5. See UW System Financial Policy and Procedure Paper #36 for further instructions.
  6. Contact John Dreger at 333 E Campus Mall #9701 for instructions regarding the processing of student loans.

Account Codes

  • Code payments for services to SFS Account Code 2620.
  • If the coding for payment is using Program 9, the Dean/Director’s Office must send the PIR to the Student Financial Aids Office for approval.
    • Program 9 can only be used with SFS Account Codes 5711 and 5713.
  • Provide the individual’s home mailing address when using the following SFS Account Codes on the PIR: 2620, 2621, 3750, 3860, 2637, 5709, 5710, and 5711.
  • SFS Account Code 2637 (Reportable) should conform to our procedures for paying human subjects.
  • 1099-MISC/1042S Tax Reportable Transactions by Account Codes are posted online.

II. Definitions of Payments That Can be Made Using a PIR

A. Scholarships/Fellowships

Student assistants are enrolled University of Wisconsin graduate students, and, on occasion, undergraduate students, who are appointed and paid directly through department channels. Payments for assistantship stipends must be pay rolled. Payments to undergraduates are generally reported on the grid form and those to graduate students are reported on a PIR. The titles authorized for student assistants are Research Assistant, Program/Project Assistant, Teaching Assistant, and Undergraduate Assistant. Additional student appointments, which also must be pay rolled., are Fellow, Scholar, Trainee, Advanced Opportunity Fellow, Special Graduate Trainee and House fellow/Resident Assistant.

Although payments for assistantship stipends must be sent through payroll, other payments to support research of research assistants or student appointments should be requested on the Payment to Individual Report. An example of this type of payment is a travel award to a research assistant.

Lump sum payments for scholarships/fellowships which are not related to student assistant-ships are generally requested through the Payment to Individual Report using the appropriate student aid class codes. Examples are athletic scholarships, participant payments, and departmental scholarships. For scholarship payments to U.S. Persons it is highly encouraged that the Scholarship Process be used and by contacting your Dean’s Office. However, effective 01/01/2015 all scholarship payments (whether for graduate or undergraduate students) to Nonresident Aliens (NRA) must be processed through Payroll due to the immigration documentation and taxation requirements.

B. Prizes and Awards

Cash prizes and awards which are in any way related to a person’s employment with the University MUST be paid through the payroll system as a lump sum payment. An example of this type of payment is an award to a faculty member for excellence in teaching. The payment will be subject to tax and social security withholding and will be reported on the employe’s W2 form.

Cash prizes and awards are considered taxable income and are reported to federal and state tax authorities. In contrast, scholarships and fellowships are taxable only to the extent they exceed tuition, books, and course-related supplies and equipment. Scholarships and fellowships to U.S. residents are not reported to federal and state tax authorities. It is very important that scholarships and fellowships be reported on the appropriate scholarship/fellowship account code. Scholarships and fellowships recorded on a prizes/awards class code will receive incorrect tax treatment. If you are unsure if a payment qualifies as an award or a scholarship, the determining factor should be whether the student has unrestricted access to the funds. It is most likely a scholarship if the recipient must be currently registered or registered in the future at an educational institution in order to receive the payment. It is most likely an award if the recipient is entitled to receive payment regardless of student status.

C. Services (Refer to account Codes 26xx for Specific Account Codes)

D. Research Subject Payments (Account Code 2637)

E. Royalties (Account Code 3860)

F. Rents (Refer to Account Codes 23xx for Specific Account Codes)

III. Instructions for Completing the Payment To Individual Report Form

Vendor # Each vendor or individual will be added to our SFS Accounting System Vendor File and be assigned a vendor number. For Accounting Services use only, leave blank.
Voucher # Each payment made in the SFS Accounting System will be assigned a voucher number. For Accounting Services use only, leave blank.
Payee name The full, legal name of the payee (last name, first name, middle initial).
Amount Enter the total amount to be paid to the individual before any applicable tax withholding.
Funding Information Enter the specific funding information to which the payment is to be charged. This includes Account, Fund, DeptID, Program, Class (Bldg #), Budget Year, and Project.
Taxpayer ID# (SSN, EIN, ITIN) The Social Security Number (SSN), Employer Identification Number (EIN), or Individual Taxpayer Identification Number (ITIN).

Enter the individual’s social security number or individual taxpayer identification number (ITIN), if any. This is the tax identification number under which any reportable payments will be reported to tax authorities. Accuracy is extremely important. Taxes must be withheld from reportable payments if a social security number or ITIN is not provided.

An individual who is a nonresident alien and does not have a social security number or ITIN, should apply for a social security number, if eligible, or for an ITIN, if not eligible for a social security number. After application has been made, enter “applied for” in this space, and see Accounting Services Policy and Procedure Manual on Tax Reporting and Withholding on Non-Salary Payments.
Invoice # Leading characters PIR plus the date of service, complete as PIRMMDDYY. Where there is an attached invoice, PIR plus the invoice number should be used.
Payment Handling Code Determines how the check will be routed. For Accounting Services use only, leave blank.
Mail To Address Enter the address to which the check should be mailed or special handling instructions (i.e., call for pickup, campus mail, etc.).

  • If the check is to be picked up, enter “please call (name) at (x-xxxx) when check is ready.
Permanent Home Address Enter the individual’s permanent mailing address if different from the “Mail Check To” address. This is the address to which a tax form will be mailed at the end of the calendar year.
If State Employee indicate Agency/Dept If paying an employee from another state agency or department, please agency and/or department.
Currently Enrolled UW Student Is the payee a student currently enrolled at a UW Institution? Check yes or no.
Residency If the payee is a legal United States resident or a resident of another country, check appropriate box. If resident of another country please enter the country name and VISA type in the space provided.
1099-MISC/1042S Tax Reportable Payment Select Yes, No, or Not Sure.

Please use the 1099-MISC/1042S Tax Reportable Transactions document to determine whether a transaction you are processing needs to be reported to the payee for tax purposes. All transactions listed in the column labeled “1099-MISC/1042S REPORTABLE TRANSACTIONS INCLUDED IN THIS CODE” must be marked/checked as reportable on the processing form you are submitting (PIR, etc.).

If you are not sure please check the appropriate box on the form and Accounting Services will make the determination. Accuracy is a must in order to be in compliance with Internal Revenue Service (IRS) reporting requirements.
Date(s) of Service Enter the exact dates during which service was/will be provided.
Purpose of Payment Describe the purpose of payment.

  • Use e-Reimbursement for travel and expense reimbursements as outlined in
For more information, call Indicate the name and phone number of a person to contact if there are questions regarding the payment request.

Add additional contact information from the Dean’s Office to be contacted instead of the individual listed on the DP/PIR form. Add the contact’s name and phone number directly under the departmental contact person. (Hint: Use “Alt + Enter” when adding the additional information in the field. Using only the “Enter” key will result in moving to the next cell or field in the form.)

Accounts Payable will only contact the person indicated from the Dean’s Office as responsible for supplying additional information; not both. If Accounts Payable receives a form without an additional Dean’s Office contact name, the contact person indicated on the form will be the only one contacted.
Business Office Use Only Where taxes are calculated. For Accounting Services use only, leave blank.
Entertainer/Public Speaker Section Complete this section if the payee is an entertainer or public speaker.

  • Attach a completed, signed entertainment contract.
    • Only UW Purchasing can sign contracts for the University unless the Department has been delegated by Purchasing to sign contracts.
  • Payment may be subject to withholding if the entertainer or public speaker is not a Wisconsin resident.
    • If the payee is an entertainer or public speaker and is a non Wisconsin-resident then a completed Department of Revenue (DOR) Form WT-11 must be attached to the PIR.
  • See Accounting Services Policy and Procedure Manual on Tax Reporting and Withholding on Non-Salary Payments for complete instructions regarding the Wisconsin Entertainer Tax.
Federal Tax Calculation For Accounting Services use only, leave blank
Scholarship/Fellowship Section If the payment is for a scholarship or fellowship to a UW student, separately enter the portions of this payment which apply to Semester 1, Semester 2, and Summer Session. Enter the award date (date the student was notified of the award.)
Approving Signatures And Dates Before payments can be processed all signatures and dates must be on the PIR (Department Chairperson/Project Director, Dean/Director, Student Financial Aids if expense is charged to Activity 9, and Authorized Institutional Approval (Pre-Audit)).

  • If the payment is for a scholarship/fellowship on activity 9, the form will be forwarded by the Dean’s office to the Office of Student Financial Aids.
Submitting the form: Print and submit one copy of the form to Accounting Services, Suite 5301, 21 N. Park Street..

Photocopy original receipts that are not 8 ½ by 11 and attach the photocopy to the PIR instead of the original.

  • The Department keeps the original receipt as a back up for 90 days and then destroys it.
Forms Help Red triangles in various fields of the form contain comments designed to help you complete the form. Also, some form text is hyper linked to web information that will assist you in completing the form.

Questions regarding this form should be e-mailed to uwtravel@bussvc.wisc.edu.
Printing Your Form There are many versions of Excel on campus. The forms have been developed to print on one page. If you are having problems printing, use the Excel tool bar, select File, then Page Set Up. This will open a dialog box for you to select “Fit to 1 page”. If this solution does not work, please contact your IT support person for further assistance.

IV. Policies for Compliance

Certification of Compliance

UW System Administrative Policy SYS 235: Personal Services Payment requires a certification of compliance on all requests for payment. Your signature on the PIR or requisition is a certification that you have read UW System Administrative Policy SYS 235: Personal Services Payment and the transaction is in compliance with the policy.

Exception to FPPP #31

Section III of UW System Administrative Policy SYS 235: Personal Services Payment states “When an institution determines an employment relationship exists, the individual must be appointed and paid on payroll unless the exception under ‘Employment Procedures’ is met. The exception listed under ‘Employment Procedures’ includes payments of less than $500 for a series of definitely predicted events to persons other than current UW System employes, full-time state employes, or students attending UW System institutions.”

Part-time state employes are not covered by the exception under “Employment Procedures”. In making the determination whether the individual is considered a student attending a UW System institution for the purposes of this exception, a student who is eligible for student employment falls into this category. Contact Academic Personnel for current guidelines regarding eligibility for student employment.

The term “a series of definitely predicted events” is to be taken literally. The $500 payment limit applies to any series of definitely predicted events, regardless of time period or source of funding.

UW-Madison has requested and received approval to make one additional exception to the policy. If the individual performing the service is a non-U.S. resident and the work is performed outside the United States, the individual may be paid as an independent contractor, regardless of whether an employment relationship exists.

Academic Support Services Policies

Chapter 36 of the Wisconsin Statutes gives the Board of Regents the authority to enter into contracts in order to fulfill the instruction, research, and public service missions of the University. Contracts entered into under this authority do not need to follow the state purchasing statutes found in Chapter 16 of the Wisconsin Statutes. UW System Administrative Policy SYS 235: Personal Services Payment permits the use of Chapter 36 authority to obtain unique services directly in support of instruction, research, or public service (referred to as Academic Support Services), without obtaining bids or waiver of bid authority.

Before deciding if a service qualifies as an Academic Support Service, it is necessary to ascertain that the person performing the service should not be pay rolled. If it is not a payroll transaction, Purchasing Services will make the final determination as to whether a service may be considered an Academic Support Service.

The requisition process must be used for all academic support service requests. A PIR cannot be used for such transactions.

UW System Administrative Policy SYS 235: Personal Services Payment requires signed agreements for academic support services if the cost is $5,000 or more (excluding itemized travel). Agreements may be written at the department’s option for services costing less than $5,000. Purchasing Services will generate the agreement and send it to the vendor for signature. For more information on the format of such agreements, contact Purchasing Services.

Regardless of dollar amount, Academic Support Services Agreements must be signed by an authorized contracting officer for the institution. This generally is the Director of Purchasing Services. You do not have authority to sign such agreements.

Related Information

UW-Madison

UW System

Related Policy/Procedure

 

Who should know this policy?

Deans, Directors, and Staff who prepare payments.

Contacts

E-mail at uwtravel@bussvc.wisc.edu.

102 Exceptional Expenditures Using 133/144 Funds Policy

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Research and Sponsored Programs (RSP), in partnership with Accounting Services, have issued the following policy for all division/departments to follow when they have 133/144 funded grants that may include language that permits exceptional expenditures that are not covered by State/University policies or exceed costs allowed within State/University policies.

Policy: 102-Exceptional Expenditures Using 133/144 Funds
Date: 08/11/03 (Updated June 21, 2013)

Statement of Policy:

Research and Sponsored Programs (RSP), in partnership with Accounting Services, have issued the following policy for all division/departments to follow when they have 133/144 funded grants that may include language that permits exceptional expenditures that are not covered by State/University policies or exceed costs allowed within State/University policies.

If you have a grant that may permit costs that are not covered by State/University policy and you believe that the expenditure should be paid through the University, please contact the appropriate RSP Team Leader to discuss the particular circumstances of the transaction prior to making the commitment. RSP will review the terms and conditions of the grant and, if covered, will issue a prior approval memo or email that can be used to pay for the expenditure through normal UW processing. If you are seeking a blanket approval for a series of transactions, please note that in your request to the appropriate RSP team leader.

The approval memo or email should be attached to the requisition, invoice, travel expense report, employee reimbursement, payment to individual report or purchasing card log for each transaction.

This process takes the place of the former UW System cost waiver agreement form. The UW System cost waiver agreement form is no longer available because it’s not required when following the appropriate UW Madison Purchasing/Accounting policies.

Although these exceptions rarely occur, following this process should prevent delays in future transaction processing.

Related Procedure(s):

 

Who should know this policy?

Deans, Directors, and Staff dealing with expenditures using 133/144 funds

Related Documents:

Contacts:

E-mail uwtravel@bussvc.wisc.edu with questions.

103 Payments to Research Participants

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103 Payments to Research Participants

Date: July 1, 2013

PURPOSE

The purpose of this policy and the following procedures is to outline the payment mechanisms that can be used to make payments to human subjects participating in research studies and to determine when gathering of research participant tax information is required.

POLICY

The University of Wisconsin (UW) often conducts research projects that involve the use of research participants.  The propriety of any payment to a research participant in a human subject research protocol will be determined by the UW’s Institutional Review Boards (IRB’s), and the related protocol must be approved or determined to be exempt by the appropriate IRB before the study is conducted.  Payment methods may include checks or cash depending on specifics of individual studies and the dollar amounts to be paid.

UW-Madison staff members have been trained to handle protected health information confidentially in accordance with the 2003 Health Insurance Portability and Accountability Act (HIPAA).  Applicable regulations will be followed based on the facts and circumstance of each study.

Payments to research participants must be reported every calendar year in accordance with the Internal Revenue Code (IRC) to the individual in Box 3 of the Internal Revenue Service (IRS) form 1099-MISC (Miscellaneous Income).  Information required includes the research participant’s name, mailing address, and Taxpayer Identification Number (TIN) which can be their Social Security Number (SSN) or their Individual Taxpayer Identification Number (ITIN).  Annually, at the end of the calendar year in which a payment is made, Accounting Services will report payments received by research participants to the IRS as required by the IRC and a form 1099-MISC (Miscellaneous Income) will be sent to the research participant.

De minimis Research Participant Payments:

  • Effective July 1, 2013, individual payment amounts of under $250 ($249 or less) are considered by UW Madison to be de minimis in nature.
  • For de minimis payments of under $250, departments are encouraged; but not required, to obtain a Taxpayer Identification Number (TIN) from the research participant, to the extent that collection of this information is consistent with the confidentiality protections provided to the research participant accepted by the reviewing IRB.
  • If the research coordinator is aware that the research participant will be getting multiple de minimis payments of under $250 that will cause the recipient to exceed the IRS limit of $600, then it is the researcher’s responsibility to obtain the required taxpayer identification information and a W-9 from the recipient.
  • De minimis payments of under $250 only applies to research participant payments and does not apply to other payments made by the University. For payments other than research participant payments there is no de minimis payment of $250 limit and a TIN and W-9 are to be obtained from the recipient.
  • De minimis payments of under $250 do not apply to Nonresident Aliens (NRA) under any circumstances. See Eligible Research Participants section of this policy below.
  • A researcher may request an exception to this policy from the Assistant Vice Chancellor for Business Services, which if approved, would allow the researcher to pay a research participant an amount greater that the de minimis payment amount without collecting TIN’s for individual research studies. Exceptions will be granted, on a case-by-case basis, based on the facts and circumstances of the individual study.

Eligible Research Participants (Who does this Policy and Payment Procedure apply to?)

  • US. Persons (Citizens, Permanent Residents-Both Employees and Non-Employees) – This policy and payment procedure, applies to all U.S. Persons (Citizens, U.S. Resident Aliens).  UW employees are treated the same as non-UW employees when participating as research participants.  Per the IRS, research participant payments are not considered wages and therefore, payments to UW employees are not required to be processed through the Human Resource System (HRS) (Payroll).
  • Nonresident Alien (NRA) – This policy and payment procedure applies to NRA’s, but the payment method for NRA is restricted to only Payment to Individual Report (PIR) due to the immigration and taxation documentation associated with payments to NRA’s as imposed by Homeland Security and the Internal Revenue Service (IRS). Please see below for restrictions relating to NRA’s:
  1. All payments to NRA’s must be processed through a Payment to Individual Report (PIR) regardless of the dollar amount. Please follow the Payment to Individual Report (PIR) procedures, attaching all required documentation as outlined in the Non-Payroll Payments Flowchart.
  2. The de minimis payment of under $250 section of this policy does not apply to NRA’s.

PAYMENT PROCEDURES

Payments to research participants are to be processed using the methods listed below only.  Employees will not be reimbursed if research participant payments to study participants are paid using a Purchasing Card (P-Card), University Personal Liability Credit Card, Personal Credit Card, or personal funds.

Payment Mechanisms

  • Payments of under $250 ($249 or less) (de minimis payment amount)

Custodian Funds and Payment to Individual Report (PIR) may be used to make de minimis payments of under $250.  To the extent consistent with the confidentiality protections provided to the research participant in the approved protocol departments are encouraged; but not required, to obtain a TIN from the research participant when de minimis payments are made.  Obtaining TIN’s from the research participants must be consistent with approved confidentiality as per IRB approved study protocols.

  1. Custodian Funds

The Custodian (Principal Investigator) can make payments directly to research participant via check, cash, or gift cards.  Follow the Custodian Funds Policy for all payments from replenishable or temporary custodian funds.  The Custodian is personally responsible for determining the amount of the advance and complying with Taxation and Identification Requirements.

Research Participant Recipient Log must be completed for all payments.  A copy of the log must be attached to the Custodian Fund Accounting Form to account for the distribution of custodian funds.  The completed log must contain the following information for each participating recipient:

  • Amount Paid to Each Recipient
  • Name or Recipient Identifier
  • Date Received by Recipient
  • Check number or Gift Card Identifier
  • Signature or Initials of Each Recipient
  1. Payment to Individual Report (PIR)

Payments of any amount can be processed on a Payment to Individual Report (PIR).  A check is issued directly to the research participant.  Follow the Policy and Procedure: 101-Payments to Individuals and the Tax Compliance and Reporting for Research Participant Payments section below.

  • Payments of $250 or more

All payments of $250 or more must be processed on a Payment to Individual Report (PIR).  A check is issued directly to the research participant.  Follow the Policy and Procedure: 101-Payments to Individuals and the Tax Compliance and Reporting for Research Participant Payments section below.

 

Tax Compliance and Reporting for Research Participant Payments

Under the Internal Revenue Code (IRC), payments to research participants must be reported every calendar year to the individual in Box 3 of the Internal Revenue Service (IRS) form 1099-MISC (Miscellaneous Income).  The information required for research participant payments include the research participant’s name, mailing address, and Taxpayer Identification Number (TIN) which can be their Social Security Number (SSN) or their Individual Taxpayer Identification Number (ITIN).  Accounting Services will report payments received by research participants to the IRS as required by the IRC, and a form 1099-MISC (Miscellaneous Income) will be sent to the research participant at the end of each calendar year in which a payment is made.

Per the Internal Revenue Service regulations, information on participants in research studies must be obtained for tax reporting purposes.  Researchers and Dean/Director’s or their designees are responsible for monitoring the dollar amounts and frequency of research participant payments to ensure tax compliance.

Effective July 1, 2013, individual payment amounts of $249 or less are considered by UW Madison to be de minimis in nature.  For de minimis payments, departments are encouraged, but not required, to obtain a Taxpayer Identification Number (TIN) from the research participant.  De minimis only applies to research participant payments and does not apply to other payments made by the UW.  For payments other than research participant payments made by the University no de minimis amounts apply.

The informed consent and any applicable HIPAA documents required for use in a research study do not need to describe the collection of information from research participants when that information is solely used to process study payment.  Instead study teams are recommended to have research subjects complete a form, which should be maintained separately from research records, to obtain relevant information that also alerts the participant that the payment will be reported by the UW to the IRS.

EXCEPTION PROCESS

Exceptions to the de minimis section of this policy may be granted based on the facts and circumstances of the research participant study.  The Assistant Vice Chancellor for Business Services is responsible for granting exceptions subsequent to receiving the following information for the particular research participant study under consideration:

  • The researcher must demonstrate, in writing, that the collection of Taxpayer Identification Numbers (TIN)’s will jeopardize research by negatively impacting the research participant pool. This must include an explanation why disclosure of information will inhibit the project from obtaining representative samples of research participants.  Confirmable and verifiable data and evidence should be provided as part of the request for exception.
  • Provide written justification that there is a low probability that the participant will receive $600 or more in payments from the UW as a whole in a given calendar year.
  • Identify the steps the researcher will implement at the research project level in order to ensure compliance with #2 above. For example:
  • Develop a form where parties acknowledge that they are not receiving total payments from the UW in excess of the Internal Revenue Service (IRS) $600 reporting limit. The narrative would include “The research participant understands that receipt of total payments of $600 would require the UW to provide notification to the IRS.”  Total payments include, but are not limited to, payments from all UW Campuses for research participant payments, rents, services (including parts and materials), prizes and awards, and other income payments.

Exception Request Submission:

  • Upon presentation of written request for exception to the Assistant Vice Chancellor for Business Services, a review will be conducted by the Division of Business Services based on the facts and circumstances, and a written acceptance or denial of the exception request for will be issued. The Assistant Vice Chancellor for Business Services will provide the final approval or denial for exceptions to this policy.
  • Exceptions will be granted for only the specific study submitted. Future studies, no matter how related or similar in nature, will require separate request for an exception to be approved by the Assistant Vice Chancellor for Business Services.

For more information contact our Tax Manager Jose Crus Jr.