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KUMC Payments to Independent Contractors Working on Research Projects

Policy
Purpose: 

To set forth the requirements for payments to independent contractors during the course of sponsored research. 

Applies to: 

The University of Kansas Medical Center (KUMC), the KU Medical Center Research Institute, Inc., (KUMCRI), and each of their affiliated entities engaged in the conduct or administration of research supported by KUMC or KUMCRI.

Campus: 
Medical Center, Kansas City
Wichita
Salina
Policy Statement: 

During the course of a project, it is sometimes necessary for independent contractors to perform one-time or limited-time services.  Because the services may be for a short duration, or specialized, contracting for independent contractors is more advantageous to a grant than hiring an employee to perform the duties.  However, an independent contractor should only be contracted for if an employee is neither qualified nor trained to perform the same duties.

An independent contractor is a person who has control over the means and methods of the work to be performed, but the payer has the right to control or direct the work to be performed.  An independent contractor is reimbursed for services through an accounts payable financial system and issued an IRS Form 1099-MISC.

Independent contractors include consultants, speakers, presenters, collaborators, lecturers and other guests of the university who share their expertise for a limited period.  Professional Service providers such as attorneys, accountants, and architects, etc., are not included in the definition of independent contractors for the purposes of this policy.

An employee is an individual over whom the payer has control over what work will be performed and how the work will be performed. An employee is reimbursed for services through a payroll system and issued an IRS Form W-2.

The KUMCRI is required to file Internal Revenue Service (IRS) Form 1099-MISC for payments to individuals for non-employee services that accumulate to $600.00 or more per tax year.  IRS regulations require the recording of payment data beginning with the first dollar paid.  Therefore, it is necessary that the KUMCRI distinguish between an employee and an independent contractor for tax reporting purposes. For additional information on classification of an employee or contractor, refer to the IRS policy Understanding Employee vs. Contractor.   

PROCEDURE

  • Verify with your Sponsored Programs Administration Post-Award Administrator that a budget line exists in the grant to reimburse independent contractors.
  • Before work is allowed to begin, a contract must be completed and signed by the contractor and the department/authorized persons at KUMC.
  • A Department at KUMC should complete a New Vendor From and obtain a signed W9 from the Individual. 
  • At the conclusion of the contract or milestone, the individual should complete and sign the KUMCRI Contractual Services Form.
  • A Department at KUMC should ensure a detailed description of services performed and dates of service are included in the Contractual Service Form.
  • A Department at KUMC must certify the Contractual Services Form by signing.
  • A Department must complete a Purchase Order and submit the Contractual Services Form to RINSTAP@kumc.edu for processing.
  • Refer to KUMC’s Conflict of Interest policy if the independent contractor is an entity owned by a KUMC employee or student, or a family member of a KUMC employee or student.
Exclusions or Special Circumstances: 

Payments to nonresident aliens for independent personal services follow a different set of IRS tax rules.  The Individual is required to submit additional information to be reimbursed.  Please refer to policy Payments to Non-employee Nonresident Aliens for additional details.

Contact: 

Associate Vice Chancellor for Research Administration: 913-588-5436
KUMCRI Senior Deputy Director and Chief Financial Officer: 913-588-5313
KUMCRI Controller: 913-588-5749

Approved by: 
Vice Chancellor for Research
Approved on: 
Tuesday, October 28, 2008
Effective on: 
Tuesday, October 28, 2008
Review Cycle: 
Annual (As Needed)
Definitions: 

Employee: An individual over whom the payer has control over what work will be performed and how the work will be performed.

Independent Contractor: An individual or entity over whom the payer has the right to control or direct only the result of the work performed, and not the means and methods of accomplishing the result.

IRS Form 1099: Informational return sent to the IRS to report various kinds of non-wage payments made to individuals. These payments are not subject to tax withholdings but are considered taxable income and required to be reported to the IRS.

IRS form W-2: An employer automatically withholds and pays all of the necessary employee income taxes as required by the IRS.

IRS form W-9: The standard form used by payers to collect tax identification information and certification. 

Keywords: 
independent contractor, payments
Review, Approval & Change History: 

11/17/2017: Updated procedure
05/06/2016: Removed Date Last Reviewed
04/18/2016: Uploaded into Policy Library
10/16/2015: Updated entity references for consistency
06/10/2015: Revised
10/28/2008: Effective Date

Research and Sponsored Projects Category: 
Research and Sponsored Projects

Moderation History

Updated: November 17, 2017 - 11:14

Log message: Edited by j372a558@ku.edu.

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