i. Miscellaneous Expense Reimbursement - Disbursement Request
ii. Vendor Invoice - Payment Authorization
iii. Human Subject/Incentive Payments
iv. California Income Tax Withholding/Non-employee Payments
v. California Sales/Use Tax
vii. Distribution of Checks
viii. Replacement Checks
ix. Direct Deposit Disbursements
x. Reversing and Reissuing a Direct Deposit Disbursement
SDSU Research Foundation issues accounts payable disbursements (excluding payroll) as payment of vendor invoices, travel advances and reimbursements, miscellaneous reimbursements, stipends, independent contractors, pre-payment of a Purchase Order, etc.
To comply with SDSU’s Information Security Plan, social security numbers should not appear on any payment request or back-up documentation. Only the information requested on the payment request form should be provided.
The following rules apply.
Project personnel are reimbursed when personal funds (cash, personal check or credit card) are used for project-related purchases of generally $1,000 or less and
- If the purchase is an allowable and reasonable expense to the project
- If sufficient funds exist in the fund and account to be charged, and
- If the purchase occurred within the project time period
For reimbursement, an SDSU Research Foundation Disbursement Request form is completed and submitted with a vendor’s original, itemized, dated receipt and other documentation as required by SDSU Research Foundation policy (i.e., supporting documentation for hosting). Facsimile and electronic copies may be accepted and may be considered as original. If an original itemized receipt is not provided, an explanation must be provided, in addition to other proof of payment, such as a copy of the front and back of a cancelled personal check or credit card statement. Please note that reimbursement for personal credit card expenses is issued directly to the cardholder only, not to the credit card company.
If a reimbursement claim requires adjustments or corrections totaling less than ten dollars, accounts payable makes the adjustment and issues the check for the correct amount. Accounts payable notifies the requester of adjustments only when the adjusted amount is equal to or greater than ten dollars. In these instances, accounts payable returns the request with an explanation of the adjustment to the requester. If able to provide additional receipts and/or explanation for the disallowed expense, the requester may resubmit the check request to the SR grant specialist, who approves and then forwards to accounts payable for processing.
The fully completed Disbursement Request form must be signed by the PI (or other designee) and SR grant specialist and submitted to accounts payable for processing. A copy of the Disbursement Request form may be accessed at AP forms.
Please note that the use of personal funds is one of three acceptable methods for the procurement of goods and services. Refer to Purchasing information for purchases using the purchase requisition process, and Procurement Card section for purchases using SDSU Research Foundation’s Procurement Card. SDSU Research Foundation strongly recommends that the purchase requisition or PCard process be followed whenever possible. Project personnel can incur personal liability when using personal funds in anticipation of a refund due to the risk that the expense may not be allowed and/or funds have been depleted.
SDSU Research Foundation reserves the right to reduce any expense reimbursement by the amount of any uncleared travel advance (see Travel Advances).
For purchases initiated with a Purchase Requisition form, the vendor issues an invoice directly to SDSU Research Foundation’s accounts payable department. Accounts payable attaches a copy of the invoice to a Disbursement Authorization (internally generated) form and forwards this document directly to the PI (or designee) for signature. The signature of the PI certifies that the goods or services have been satisfactorily received or rendered; the amount charged is reasonable and correct; no prior disbursement request or invoice has been submitted; and the cost is appropriately chargeable to the fund indicated. The Disbursement Authorization form must be returned as quickly as possible to avoid late payments and/or credit holds. The PI forwards the signed Disbursement Authorization form to the SR grant specialist. The SR grant specialist must also approve the document and then submit to accounts payable for payment.
Accounts payable can process vendor invoices for payment upon receipt of a shipping/packing slip signed by the PI (or designee) and the SR grant specialist. This action eliminates the need to forward the invoice to the PI for additional payment authorization. The vendor is paid after accounts payable receives an original invoice from the vendor that agrees with the packing slip (with appropriate signatures) and the originating Purchase Order.
SDSU Research Foundation provides human subject/incentive payments to individuals participating in research projects. The Internal Revenue Service classifies these payments as Other Income and requires that they be reported on a 1099Misc form if the total payments to an individual are $600 or more in a calendar year. SDSU Research Foundation must adhere to this requirement to remain in compliance with IRS regulations. However, there are two circumstances under which the project is required to track annual human subject/incentive payments and notify SDSU Research Foundation when the individual has received $600 or more in a calendar year. These circumstances are as follows:
- Many research projects invoke federal regulations that require strict confidentiality for the human subjects involved. If the SDSU Institutional Review Board has reviewed the project and required that all human subject data be held confidential, then numbers, demographics, etc. must be used to identify the subject. Nothing that would allow specific identification of a person or persons can be used. SDSU Research Foundation therefore, cannot directly issue a disbursement to an individual serving as a human subject without a breach of confidentiality. However, in the event that an individual is paid in excess of $600 in a calendar year, the project is responsible for providing the name, address, completed Vendor Information Form, and total amount paid to SDSU Research Foundation’s accounts payable department so that a 1099Misc form can be issued at year-end.
- Many research projects have a need to hand out very small amounts of cash to an individual at the time of her/his participation in a project. Some of these participants do not have the means to cash a check or receive a direct deposit; if the participants were not given cash, the subject population would be lost. In addition, the same population of subjects does not participate over and over again. Because of this need for cash, a very low potential tax liability, and the expense of writing and tracking hundreds of $5 and $10 payments, SDSU Research Foundation will not track (for 1099Misc purposes) these small human subject/incentive payments. In the event that an individual receives numerous payments and the total paid is $600 or more in a calendar year, the project is responsible for providing the name, address, completed Vendor Information Form, and total amount paid by SDSU Research Foundation’s accounts payable department. A 1099Misc form will be issued to the individual for the calendar year-end by January 31st of the following year. However, in cases where a project anticipates issuing human subject/incentive payments to any single individual of $600 or more in a calendar year, those payments must be processed for 1099Misc tracking regardless of individual payment amounts.
Note: These special circumstances may be used only for U.S. citizens and resident aliens. All payments to nonresident aliens must be processed according to normal operating procedures. There is no $600 reporting minimum for such payments.
Procedures: Human subject/incentive payments may be processed using a Disbursement Request, Miscellaneous Income Disbursement Request, or Miscellaneous Income Disbursement Request for Multiple Recipients. These forms may be accessed at AP forms. These forms are used for many other types of payments, but should be used as follows for human subjects/incentive payments:
- Disbursement Request: The Disbursement Request form is addressed directly to the recipient for an amount less than $50. This form does not require a Vendor Information Form and payments will not be tracked for 1099Misc reporting. If there is knowledge that an individual will receive $600 or more in a calendar year, then this form must not be used, regardless of the disbursement amount.
- The Disbursement Request is made out to the PI or other appropriate individual and designated as a miscellaneous advance. This method may be used under the following two circumstances only:
- a.If the Institutional Review Board (IRB) has deemed the human subject information confidential, the PI may request an advance regardless of the amount to be paid to the recipient. The PI or SR grant specialist must clearly indicate on the Disbursement Request that payments involve IRB APPROVED CONFIDENTIAL DATA. The advance must be cleared within 60 days and may be cleared with a list of payments issued under the process in place for the study that ensures confidentiality for subjects (i.e. listing by subject tracking number). By January 15th of each year, the PI provides to accounts payable a list of individuals who were paid $600 or more in the previous calendar year. This list includes names, addresses, completed Vendor Information Form, and total amount paid to each individual. Accounts payable issues a 1099Misc form to each individual who was paid $600 or more.
- If the research project needs to make small cash payments to multiple recipients, the PI requests an advance providing no single payment to an individual is $50 or more. The advance must be cleared within 60 days and may be cleared with a listing of the recipients and amount paid. A Vendor Information Form and permanent addresses are not required. If at the end of the calendar year, the project finds they have paid an individual $600 or more, the PI provides a listing of those individuals to accounts payable by January 15th. This list includes names, permanent addresses, completed Vendor Information Forms, and total amounts paid to each individual. Accounts payable issues a 1099Misc form to each individual who was paid $600 or more in a calendar year.
- Miscellaneous Income Disbursement Request: The Miscellaneous Income Disbursement Request is addressed directly to the recipient. This form requires a completed Vendor Information Form and permanent address. Payments are tracked and a 1099Misc form is issued at year-end if total payments are $600 or more. Note: If there is knowledge that an individual may receive $600 or more in a calendar year, this form must be used, regardless of the disbursement amount.
- Miscellaneous Income Disbursement Request for Multiple Recipients: The Miscellaneous Income Disbursement Request for Multiple Recipients is simply a timesaving device for making multiple one-time payments. This form requires completed Vendor Information Forms and permanent addresses. Payments are tracked for each individual and a 1099Misc form is issued at year-end if total payments are $600 or more. If there is knowledge that an individual may receive $600 or more in a calendar year, this form (or the Miscellaneous Income Payment Request form) must be used, regardless of the disbursement amount.
Note: The Miscellaneous Income Disbursement Request and Miscellaneous Income Disbursement Request for Multiple Recipients forms are used to pay for prizes, awards, gifts, referees, umpires, judges, short- term guest lecturers (one or two days, normally), entertainers and royalties. These forms may not be used to pay a current employee of any campus or auxiliary within the California State University system for services performed.
Individuals receiving payments through the use of these forms are acting on an independent basis and are not employees of SDSU Research Foundation. The individual is fully responsible for any taxes relating to the amounts paid. SDSU Research Foundation withholds federal or California personal income taxes if required by government regulations (i.e. nonresident or “back-up” withholding).
These forms may not be used to pay Independent Contractors except for referees, umpires, judges, short-term guest lecturers or entertainers.
SDSU Research Foundation tracks all payments and issues a form "1099-MISC" at the calendar year end, in accordance with IRS guidelines.
Withholding is required when making payments to California nonresident vendors/independent contractors for services performed in California, as well as rent, royalty and beneficiary payments. The source of income from personal services is not determined by the residence of the tax-withholding agent (SDSU Research Foundation), or the location where the contract for services is entered into, or the place of payment. The source of income from personal services is the location where the services are actually performed. Payments made for personal services performed in California are California source income.
- When is SDSURF required to withhold?
SDSURF is required to withhold from all payments or distributions of California source income made to a California nonresident when the payments or distributions will be greater than $1,500 for the calendar year, unless SDSU Research Foundation receives authorization for a waiver or a reduced withholding rate from the Franchise Tax Board (FTB) or a Form 590 from the payee. An SDSURF Vendor Information Form should be submitted to accounts payable prior to processing any payments for vendors providing services.
- What is the withholding rate?
The withholding rate is seven percent (7%) of:
- gross payments made to a California nonresident entity
- for services performed in California.
- recipients of California rents or royalties.
- distributions of California source income made to California nonresident beneficiaries of estates or trusts.
- gross payments made to a California nonresident entity
- Are there exceptions to withholding?
Yes. Withholding is not required if one of the following exceptions is met:
- payment is for goods
- payment is made to a resident of California or to a corporation or partnership that has a permanent place of business in California
- the services provided by the California nonresident are not performed in California
- total payments of California source income to the vendor are equal to or less than $1,500 for the calendar year
- payment is income from intangible personal property, such as interest and dividends
- vendor is a tax exempt organization under either California or federal law
- payment is compensation for a motor carrier providing transportation in two or more states
- payments are made to a California nonresident corporate director for services
- payments are wages paid to employees
- vendor receives a written authorization waiving the withholding from the Franchise Tax Board and submits documentation to withholding agent, or
- vendor is a bank or banking association.
- Which California nonresident entities are subject to withholding when receiving payments or distributions of California source income?
- individuals who are not California residents
- corporations, LLCs and limited partnerships that do not have a permanent place of business in California or are not qualified through the Office of the Secretary of State to do business in California
- general partnerships that do not have a permanent place of business in California, and nonresident estates and trusts.
- What types of payments are subject to withholding?
The following California source income is subject to withholding:
- payments made for personal services performed in California
- payments received for a covenant not to compete in California
- payments releasing a contractual obligation to perform services in California
- income from options received as a result of performing personal services in California
- bonuses paid for services performed in California
- rents and royalties from assets located in California.
- If SDSURF expects payments to a nonresident to exceed $1,500 during the year, when does withholding start?
SDSURF begins withholding on the first payment to the nonresident. The total payments are subject to withholding, not just the amount exceeding $1,500.
- Does the Franchise Tax Board (FTB) require "catch-up" withholding if the withholding agent reasonably believed the total payments to a nonresident for the year would not exceed $1,500, but later determines the total payments will exceed $1,500?
No. Withholding begins as soon as SDSURF determines that total payments of California source income for the calendar year will exceed $1,500. If SDSURF reasonably believed the total payments would not exceed $1,500 for the calendar year, the FTB does not require the withholding agent to make “catch-up” payments.
San Diego State University Research Foundation is subject to sales/use tax imposed by the state of California upon retailers and purchasers conducting business in the state. The base rate for sales/use tax purposes is the same. District taxes may add to the rate and vary from location to location, generally by county. The important thing to remember is that there are only very limited circumstances under which San Diego State University Research Foundation is not subject to sales or use tax. For additional information please refer to San Diego State University Research Foundation’s Sales and Tax Use Guide located SDSURF Sales Use Tax Guide (PDF format, 230MB)*
If a vendor requires prepayment or does not accept a Purchase Order, project personnel determine the amount of required prepayment (including tax and all related charges), and submit a Purchase Requisition, as well as a Disbursement Request made payable to the vendor. The buyer will make every effort to negotiate terms or procure goods/services via P-Card. In the event terms cannot be reached, the buyer will request a proforma invoice to attach to the disbursement request.
Checks are normally distributed in one of two ways:
- 1.Checks are generally mailed to the name, permanent address and zip code of the payee or vendor indicated on the payment document. Campus mail may be used to send checks to SDSU Cashier’s Office, Aztec Shops and Associated Students only. Campus mail is not used to send checks to an individual.
- In an emergency situation, the check may be forwarded to the sponsored research administration module if noted on the Disbursement Request. The check recipient may pick up the check upon presentation of proper identification. These checks may be held for a maximum of two working days. If they have not been picked up within this time frame, they are mailed to the recipient.
- Lost or Stolen Checks
Project personnel must immediately notify the SR grant specialist if an SDSU Research Foundation check is lost or stolen. After accounts payable places a stop payment on check, a replacement check is generally issued within five working days.
- Void Checks
If an accounts payable check is no longer required or has been incorrectly written, the project will return the check to the SR grant specialist. The SR grant specialist returns the check to accounts payable for cancellation. Before cancellation, accounts payable will verify with the bank that the check has not been cashed.
- Checks not Received
In the event that a check has not been received, the project personnel contacts the SR grant specialist to request a new check. After accounts payable places a stop payment on the check, a replacement check is issued.
Vendors, employees, and students may request payments be made through direct deposit by completing an Accounts Payable Direct Deposit Authorization Form. All accounts payable direct deposit disbursements require an email address in order to notify the payee of the payment.
SDSU Research Foundation complies with all rules and regulations that govern direct deposits established by the Federal Reserve and NACHA, The Electronic Payment Association. Direct deposits can be reversed and re-issued immediately when the void is done on the same day the direct deposit file is generated but has not been transmitted to the bank. Once the transmission has occurred, reversing the direct deposit can be done up to five (5) days after the transmission. Reissuing the disbursement will be done only after the bank ACH reversal confirmation is received and it has been confirmed that the funds have been returned into the bank account. After five (5) days of the direct deposit file transmission to the bank, rules and regulations govern additional procedures required to have the direct deposit reversed and there is no guarantee that the disbursement will be returned. Reissuing these direct deposits will have to be analyzed on a case by case basis if the original disbursement is not confirmed as returned by the bank.
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