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Tax Compliance - Financial Management Services - BC*

Activity: Tax Compliance - Financial Management Services - BC
Financial Policy: N/A
Related Policies: N/A
Additional Forms: N/A

Things to Know:

1. Tax Compliance - Financial Management Services

a.  General Resources.
i. Tax Reporting & Retirement http://www.fms.indiana.edu/tax/
ii. Tax Reporting and Retirement Processing Staff http://www.fms.indiana.edu/tax/staff.asp
iii. Signup for the tax listserv: http://batboy.fms.indiana.edu/mailman/listinfo/tax_users
iv. Frequently Asked Tax Questions http://www.fms.indiana.edu/tax/annual/FAQ.asp
v. Tax Forms and Publications http://www.fms.indiana.edu/tax/taxform.asp
vi. Tax Withholding Changes http://www.fms.indiana.edu/tax/withhold.pdf
vii. Sales Tax Processing http://www.fms.indiana.edu/tax/sales/process.pdf
viii. Employee vs. Independent Contractor Classification - See FIN-PAY-IV-220, Determination of Employee or Independent Contractor Status
ix. Non-Resident Alien Resources http://www.fms.indiana.edu/tax/NRA/FVTguide.asp

b.  Payroll Tax Compliance.
Payroll tax is the largest tax expense of the University. Income taxes and the employees’ share of FICA are withheld from income; the employer’s share of FICA will have been accounted for when budgeting for salaries. However, the provision of non-cash fringes (i.e. discounts, vehicle usage, most employee gifts, etc.) not otherwise budgeted will also result in additional FICA expense.

c. Nonresident Alien Tax Compliance.
Payments to nonresident aliens can result in an unexpected tax expense to the University. The tax will often be withheld from the payment that income being paid to the nonresident (i.e. honoraria, fellowship, etc.). However, there may be situations where the department does not wish to reduce the payment for these taxes or the agreement with the nonresident did not address the possibility of tax withholding. In these instances, the department should account for the additional amount to cover a tax liability it is paying on the recipient’s behalf as well as the actual payment itself.

i. Quick Guide to International Payment Procedures http://www.fms.indiana.edu/tax/NRA/int'l_guide.asp
ii Nonresident Alien Payment Information http://www.fms.indiana.edu/tax/NRA/FVTguide.asp
iii. International Students http://www.fms.indiana.edu/tax/NRA/int'l_stud.asp
iv. International Short-Term Visitors http://www.fms.indiana.edu/tax/NRA/short_term.asp
v. International Faculty & Staff http://www.fms.indiana.edu/tax/NRA/fac_staff.asp
vi. Resources http://www.fms.indiana.edu/tax/NRA/resources.asp
vii. Definition of Terms http://www.fms.indiana.edu/tax/NRA/int'l_terms.asp

d.  Sales Tax Compliance. Sales of merchandise and certain property rights may result in a sales tax liability. Departments should contact the tax department for assistance if it is unclear whether sales tax must be collected. Procedures for collecting and remitting sales tax can be found in item (a)(vii). If a transaction results in a sales tax liability, the University and the department engaging in the sale are still responsible for remitting the sales tax, regardless of whether the department collected sales tax from the purchaser. Failure to collect sales tax from the purchaser will result in expense to the department making the sale.

e.  Unrelated Business Income Tax Compliance. The University is subject to tax on the income resulting from activities that do not further its exempt purpose. Departments engaging in a new revenue producing activity should complete the Revenue Producing Activities questionnaire. The tax department will analyze the activity for exposure to the tax on Unrelated Business Income and notify the department if additional information is necessary and if the department’s activity will be subject to the tax. Departments subject to the tax should budget for a tax of 35% on the net unrelated income of the activity.

Please contact Vicky Fry, vafry@indiana.edu for more information.

*BC - Budget Construction