Accounting Office / Accounts Payable

Please refer to the flowchart for payments for services provided by individuals as a guide to the attachments and approvals needed for services. There is a separate flowchart for payments for services provided by non-individuals.

Unless the payment is to speakers or entertainers, you should review the Independent Contractor Determination page to determine that the payee is correctly classified as an independent contractor. If the payee does not qualify as an independent contractor, the payment should be made through the Payroll Office as an employee.


Attachments When Paying for Services: The type of service being performed and the dollar amount determine the documentation required. Please refer to the flowchart for payments for services provided by individuals for assistance.
Conflict of Interest (COI) Form
A Conflict of Interest (COI) Form is necessary to obtain information regarding potential conflicts of interest.

If the responses to any of questions 4-7 are Yes, there is a potential conflict of interest, and a Web Requisition must be submitted through Procurement Services, rather than using a Disbursement Voucher.

If the response to question 8 is No, the payee is a non-resident alien. Please see the IRS Form 8233 heading below.

Professional Services Contractual Agreement
The purpose of the additional information on the Professional Services Contractual Agreement (PSCA) is to clearly commit to writing what is expected between the two parties. Since the PSCA form does not include a tax identification number, a W-9 form also will be needed if a KFS Vendor needs to be set up. The W-9 form should not be attached to the Disbursement Voucher, but a COI form also must be attached to the Disbursement Voucher, as well as a PSCA when required.

IRS Form 8233
If an IRS Form 8233 is completed, a W-9 form is not needed when setting up a KFS Vendor. However, a Professional Services Contractual Agreement may also be required as a Disbursement Voucher attachment, depending on the dollar amount of services.

The purpose of the IRS Form 8233 is to exempt the individual payee from the 30% withholding for federal taxes. To qualify for exemption from withholding, the payee must have 1.) a U.S. Social Security Number (SSN) or Individual Taxpayer Identification Number (ITIN), 2.) the payee's country must have a tax treaty with the U.S., and 3.) the payee must not have exceeded the maximum allowable number of days in the U.S.

If you know that the payee cannot meet all three of these requirements, you do not need to complete or attach the Form 8233. You can simply indicate that you acknowledge that 30% will be withheld for federal taxes. The payee's permanent address will still be required, as this will be needed for tax reporting.

If you promised the payee a fixed amount (e.g., $1,000.00) and your department is willing to pay the extra amount for withholding, you could "gross up" the payment. For example, if the promised net amount was $1,000.00, you would divide this amount by (1 - .30) to arrive at the gross amount of $1,429.00 to be charged to your department. (The IRS requests that we round to the nearest dollar.) The withholding amount of $429.00 will be credited to account 206-0026 to reduce the payment to the net amount. Although you are not obligated to "gross up" payments, you can contact Bill Cahill (294-5124) or Carole Gill (294-5181) for assistance if you choose this method.

If you can state that the payee is not a U.S. citizen and performed all the services outside the U.S., the payment will not be taxable and an IRS Form 8233 does not need to be completed or attached.

Tax Reporting for Services:

Iowa State University must comply with IRS regulations regarding the reporting of taxable income. We must also comply with the laws of the State of Iowa and the directives of the Board of Regents. As some of these laws and regulations are difficult for beginners to understand, please feel free to contact Bill Cahill (294-5124) or Carole Gill (294-5181) if you need assistance.

Payments of $100.00 or more for services provided by individuals will require using a Disbursement Voucher instead of a Simple Disbursement Voucher. If a KFS Vendor with a tax identification number is not already set up, it will need to be set up before the Disbursement Voucher can be processed.




This page was last updated on January 24, 2017.



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