Step One – Determine if all of the services and/or goods were performed/consumed outside of the United States.

If so and the income is considered foreign income, the University is not required to withhold or report any taxes on these payments. To document this understanding, the department should provide a completed “Statement for Services” to the Treasurer’s Office at and no further action is required. See Step Four about creating a vendor number.

All others will proceed to Step Two.

Step Two – Determine if they are an employee or an Independent Contractor.

This step applies to payments to individuals or sole proprietors providing a service or goods in the US. If the payment is to a company or government, proceed to step three. All departments must complete the Workers Classification Questionnaire. If they are to be treated as an employee, they should be paid though the payroll office and a vendor record should not be created. The payroll office will require them to provide various documents and information to ensure that taxes are properly withheld and recorded. Visit payroll’s website at for more information.

If they are not employees, and the services are performed in the USA only, they will need to complete a Non-Citizen Independent Contractor Form.

All others proceed to Step Three.

Step Three – Obtain the Correct IRS Form W-8 from the Vendor.

For all other vendors, an original W-8 will need to be provided to the Treasurer’s Office before the vendor can be created or payments processed. The W-8 is required by the IRS and assists in determining if taxes should be withheld and reported. Listed below is a guide for selecting the correct W-8.

  • Foreign Government/Tax Exempt Organizations – should provide a W-8EXP along with a letter from a U.S attorney or the IRS stating the entity is tax exempt.
  • Foreign Company / Individual – A W-8BEN should be provided.
  • Income Connected with the trade or business in the U.S. – Form W-8ECI should be completed and a U.S. Taxpayer ID is required. Tax withholding is not required but the payment is reportable.

Step Four – Creating the Vendor Number

The department emails all attachments to and the Accounts Payable staff will then create the vendor number. All vendors will also be required to complete a “Vendor Payment Selection Form” before a vendor can be created.

The University’s Payroll Office should be consulted for any questions on this topic and they can be reached at 865-974-5251.