Processing an Honorarium

Items which must be considered prior to processing an honorarium include the following:

• Is the person whom we are paying on the USNH Payroll  (includes work study students, part-time employees, hourly, etc.)? If the answer is yes, payment must be processed through PSU payroll.
• Does the function that this person will or has performed constitute an employer/employee relationship as defined by Internal Revenue Service? If so, payment must be processed
  through PSU payroll. 

When an individual performs services that are customarily provided by a USNH employee, there may be an employer/employee relationship according to law. In such cases, payments must be made through regular employment and payroll procedures. WHEN IN DOUBT AS TO WHETHER THE INDIVIDUAL IS AN EMPLOYEE OR A CONTRACTOR, ALWAYS CALL THE PSU PAYROLL OR ACCOUNTS PAYABLE OFFICE FOR A DECISION. 

Is the person from a foreign country? If so, then we need to know from which country and what kind of visa they presently hold. NOTE: This is extremely important for two reasons.

• We must determine if the United States has a treaty agreement with their country (tax purposes)
• We must also determine if the type of visa that they have allows us to compensate them as desired. INS (Immigration and Naturalization Service) has some very strict rules for certain types of visas. 

Once the above items have been determined you must ensure that the appropriate account code has been utilized. Use account codes 717200 (professional services). Also, please remember that we must be provided with the appropriate Social Security # and the current mailing address (not a campus address). 

STIPEND DEFINITIONS

• Consultants are self employed individuals, partnerships, or firms which
  provide professional evaluations, advice, or services (purely advisory in
  nature) to PSU occasionally and for short periods of time. Consultants are not USNH employees or established vendors handled through regular purchasing procedures. USNH employees may not be considered consultants and may not be paid for any services other than through normal payroll procedures. The consultant provides these services independently, without supervision of the individual engaging these services. Consultant agreements require special approvals - always contact the PSU Purchasing Office prior to making arrangements. Travel expenses and/or support may be part of the agreement; however, unless specified in the agreement, there
  is generally no obligation on the part of the University to provide a place of performance of these services.
• Employee -- (from IRS definition) 
  An individual performing services subject to the control of an employer, both as to what shall be done and how, is an employee. The employer does not have to actually direct or control the way the services are performed; it is enough if he has the right to do so. An employee must be compensated through the personnel/payroll system. 
• An independent contractor is an individual over whom the employer has the right to control or direct only the result of the work and not the
  means/methods of accomplishing the result. When determining whether a worker is an employee or independent contractor, the IRS typically applies the common law test of control. Under this test, if an employer has the right to control and direct what a worker does and how he or she does it, an employer-employee relationship exists. In the absence of such control, a worker may be classified as an independent contractor. 
• Services are defined as tasks performed independently by a company or individual, such as tests or analyses, and require a Purchase Order, but not a consultant agreement or subcontract. 
  
  © 1998 Plymouth State University. All rights reserved.Last Updated: 08/16/03