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Nonresident Alien Payments

The University is required by Federal law to document and report all payments made to Nonresident Aliens. The documentation process includes the collection of information regarding a payee's foreign status. Beginning in 2008, the University is using GLACIER, a secured web-based Non Resident Alien tax compliance system that foreign visitors can use to document their immigration and tax data.

What are the benefits of using GLACIER?

GLACIER helps determine tax residency, withholding rates and income treaty eligibility.
GLACIER helps manage required documentation, maintains a record of disbursements and prepares certain tax forms and required statements.
GLACIER provides the Non-Resident Alien with options that may be available to them under a tax treaty between the U.S. and their country of tax residency

How GLACIER works

  1. Determine whether the foreign visitor is not a U.S. Citizen. These individuals tend to have the visa status with letter and number combinations such as B1, B2, WB, etc. All foreign visitors who are not U.S. Citizens, Permanent Residents, Refugees, or nonresidents working outside of the U.S., are required to complete a GLACIER record. The department payroll/personnel specialist will nominate them for a Glacier account.
  2. For department payroll/personnel specialist, log in to GLACIER Nomination. If you do not have access to GLACIER Nomination, contact GlacierAdmin-L@listserv.ucsb.edu to request access.
  3. Complete the GLACIER Information Request Form and select SEND.
  4. An account will be established in GLACIER and an email will be sent to the foreign visitor. The email will include a temporary UserID and Password that will allow access to the GLACIER system.
  5. GLACIER will prompt the foreign visitor to answer a series of questions. Once completed, GLACIER will generate forms and provide instructions on how to complete the registration process. In addition, GLACIER will identify whether payments to the foreign visitor will be subject to income tax withholding.
  6. Once Accounting has received the signed documents and payments to the foreign visitor can proceed.

Updating Information on GLACIER

Foreign visitors are asked to review and update the information on GLACIER on an annual basis and as changes occur in their foreign status.

Nonresident Alien Income Tax Withholding

Payments to Nonresident Aliens are subject to 30% Federal withholding and up to 7% California withholding on all non-payroll payments subject to income tax reporting.

Withholding Exemption
Payments to certain Nonresident payees with a valid U.S. Taxpayer Identification Number (SSN or ITIN), and applicable international tax treaty article, may be exempt from withholding. The University determines eligibility for withholding exemptions after payees have completed the Tax Reporting Registration Process (GLACIER) as outlined above.

Guidance For Visitors Subject to Income Tax Withholding
Visitors subjected to income tax withholding will be required to file Federal and or State Income Tax Returns in order to claim a refund of taxes. Visitors can find more information regarding obtaining an Individual Taxpayer Identification Number at the following sites:

Publication 1915, Understanding Your Individual Taxpayer Identification Number (U.S.)

IMPORTANT UPDATE: AFTER 2006 UCSB IS NO LONGER AN INTERNAL REVENUE CERTIFYING ACCEPTANCE AGENT.
Accounting no longer accepts and processes IRS Form W-7 Application for IRS Individual Taxpayer Identification Number (ITIN) on behalf of international visitors who wish to obtain a valid U.S. Taxpayer Identification Number. For more information on U.S. Taxpayer Identification Numbers and how to obtain the appropriate type, consult this web site: Taxpayer Identification Numbers (TIN).
 

References

UC Accounting Manual

T-182-27 - Taxes: Federal Taxes of Aliens

T-182-37 - Taxes: Income Tax Information Found in the Accounting Manual

T-187-77 - Taxes: Taxation of Scholarship and Fellowship Grants and Educational Assistance

Internal Revenue Service
Publication 519 - U.S. Tax Guide of Aliens (pdf)

California Franchise Tax Board
Form 540NR Instructions - Nonresident or Part-Year Resident Booklet (pdf)

Income tax withholding/reporting:
If payee is unable to satisfy both the documentation and status requirements federal and state income tax withholding is mandatory. Withholding and tax reporting are discussed in the following tables (Note: Accounting can no longer process IRS Form W-7):