Paying Human Subjects and Maintaining Confidentiality and 1099 Reporting
Frequently Asked Questions
- What options are available for making payments to human subjects? See Administrative Procedures: Paying Human Subjects Directly, Making Payments using Prepaid Debit Cards or Making Payments to a Third Party.
Prepaid Debit Cards A reloadable debit card offers a fast and safe method for paying study participants and will provide an excellent alternative to AP checks, gift cards and petty cash. Departments will enter a Blanket Order Requisition into EFS using supplier # PPDC and attach the PPDC Study Form. For those resulting in $600 or more in qualifying payments to a subject, a W9 and social security # will be required to comply with IRS reporting requirements. Social security # will be entered into the portal at time of subject registration for the University to meet federal 1099 reporting responsibilities.
Check A check can be issued directly to a human subject. Complete a Check Request Form (UM 1659) and forward to your designated Cluster for processing. Use the cluster SPV cluster supplier number for multiple payments aggregating less than $600 in a calendar year. Payment requests $600 or over (require a W9) or payments to Foreign Nationals (non-resident aliens) require a supplier set up. Foreign Nationals vouchers will be reviewed by the Payroll Department for any tax reporting requirements. Using the central disbursement process provides the best methods for the University to meet federal 1099 reporting responsibilities and internal controls to protect the University's assets against fraudulent activity and fulfill fiduciary responsibilities.
Cash Advance When necessary, departments may request a cash advance to pay human subjects. Complete a Travel Authorization (TA) and cash advance transaction to obtain funds for distribution. Within thirty days of the ending date on the TA, a completed Employee Expense Worksheet and support documentation (e.g., a log detailing the actual distribution of the funds) must be submitted accounting for and reconciling the disbursement of the cash advance. To receive a cash advance, the researcher must be an employee of the University of Minnesota. If any subject payments to an individual will be $600 or more in a calendar year the payment/s should be made through the standard disbursement process, setting up a supplier (W9 required) and issuing a check. The Researcher must submit a log with all payee information and W9 to Disbursement Services Tax Analyst by December 31st for any human subjects receiving $600 or more payments within a calendar year.
Zero Balance Checking Account (ZBA) A zero balance account may be an option for making payments to human subjects. Only official University depository accounts may use the University federal tax exempt identification number or "University of Minnesota" or the name of any University department or program in the account title.
Account holders must submit a log with all payee information to Disbursement Services Tax Analyst by December 31st for any human subjects receiving $600 or more payments within a calendar year, accompanied by W9’s for the payees.
The University's Treasurer is responsible for approving official ZBAs. Approval of ZBAs is justified only in rare circumstances, and only if other University payment options are not feasible. In these instances, the Office of Investments and Banking should be contacted.
For more information, see Administrative Policy: Utilizing University of Minnesota Bank Accounts.
Non-cash payments Compensation such as gift certificates, t-shirts, etc. can be given to human subjects. The Researcher must submit a log with all payee information and W9 to Disbursement Services Tax Analyst by December 31st for any human subjects receiving non-cash payments valued at $600 or more within a calendar year.
(No distributions $600. to any one individual during a calendar year. See University of Minnesota Hospitality, Alcoholic Beverages, and Other Special Expenses Allowability grid for more information.
- How should payment be made to a human subject that is a University employee?
A check may be issued directly to an employee human subject. Complete a Check Request Form (UM 1659) and forward to your designated Cluster for processing. Use the cluster SPV cluster supplier number for multiple payments aggregating less than $600 in a calendar year. Payment requests $600 or over will require a supplier set up and a W9.
- Is a supplier code required to pay human subjects?
If a supplier code is already established, that code should be used. If a supplier code has not been set up and if the cumulative payment to a human subject is less than $600 in a calendar year (annually), a supplier code does not need to be established. These payments can be issued using the Clusters Single Payment Supplier Number.
- Is Federal tax ID (often the same as SSN) required for supplier set-up?
Federal tax ID number (SSN) or individual tax ID number is required for all suppliers. For payment/gifts processed outside of the central disbursement supplier payment process the policy clearly puts the responsibility for tax reporting upon the department when payments to any one individual exceed $600 for a calendar year. In these situations the department is required to obtain the federal/individual tax ID, full address information and submit the W9 (located in the forms library or IRS Website) form along with the payee information to Disbursement Services by the end of the calendar year so that the appropriate tax filing can be completed. The best way to obtain the tax ID in these instances is to ask the individual to complete a W-9 form prior to payments being issued.
- Does having the tax ID number on a supplier record violate HIPAA?
No. The tax ID number is considered private information but using it on a supplier record is not a violation of HIPAA. Only those with a business need to see it will have the access to do so.
- What documentation should be sent for imaging of human subject payments? What should be retained in the department?
Send the completed Check Request Form to your Cluster. Do not identify the study's details on these forms. To protect the confidentiality of subjects, all payment details, including proof of payment, must be maintained in the departments. This can be in the form of a log or pre-numbered department receipts. The recipient is required to sign the log or the receipt to indicate the payment was received.
- Which chart fields should be used?
Chart fields used should follow the budget outlined by Sponsored Projects Administration (SPA).
- Are taxes deducted from payments to human subjects?
Required taxes are withheld on payments to foreign nationals and reported to the Internal Revenue Service on form 1042 S. Taxes are not deducted from payments to non-foreign national subjects, but payments may be reportable income.
Payments that are reportable through all types of payment methods including the financial system must be reported on the individual's 1099 if the cumulative payments equals or exceed $600. University departments are required to report the name, address, W9/tax ID number and total amount of payments made by their departments for each subject who receives cumulative payments with a value of $600.00 or more during a calendar year. A 1099 may be issued to a subject when the cumulative payments made by multiple departments is $600 or greater. The necessary reportable payment details may not be available centrally for all subject payments, such as cash payments made on-site, payments made from Zero Balance Accounts, and non-cash payments. This information must be forwarded by mail to the Disbursement Services Tax Analyst, 660 WBOB, and 1300 S. 2nd St., Minneapolis, MN 55454 prior to December 31st each year.
- Is the payee signature required when a human subject receives payment?
It is a requirement to have all recipients sign a log acknowledging payment to them unless the logistics of the payment/study makes this impossible.
- What 'invoice number' should be entered when paying a human subject?
When completing the Check Request Form on-line, the form will automatically generate an “invoice number” to use to process the payment. If for some reason the check request for is not completed on-line, the Invoice Standards Job Aid should always be referred to for the proper numbering convention. For subject payments, the invoice number should consist of the subject's first initial, last name and document date. For example: James Smith July 1, 2007 would be entered as Jsmith070107. The goal is to enter meaningful and consistent data to prevent duplicate payments, and assist the payee in identifying the reason for the payment.
- How quickly can human subjects receive their payment?
For subjects payment processed the cluster SPV cluster supplier number the pay lag is one day after the voucher is approved and posted. Checks from the financial system are mailed the business day following document acceptance and approval.
If you have any questions contact University Financial Helpline (612) 624-1617.