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SDSURF › Project Administration Guide › Accounts Payable Section › Accounts Payable

Accounts Payable

1. Miscellaneous Expense Reimbursement - Check Request
2. Vendor Invoice - Payment Authorization
3. Human Subject/Incentive Payments
4. California Income Tax Withholding/Non-employee Payments
5. California Sales/Use Tax
6. Prepayment
7. Distribution of Checks
8. Replacement Checks


SDSU Research Foundation issues accounts payable checks for such 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 provide the information requested on the payment request form.

The following rules apply.

1. Miscellaneous Expense Reimbursement - Check Request

Project personnel are reimbursed when personal funds (cash, personal check or credit card) are used for project-related purchases generally $1,000 or less:

  • If the purchase is an allowable and reasonable expense to the project
  • If sufficient funds exist in the fund and account to be charged
  • If the purchase occurred within the project time period

For reimbursement, an SDSU Research Foundation Check 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). Note that facsimile and electronic copies may be acceptable 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 copy of front and back of a cancelled personal check or credit card statement. Please note that reimbursement for personal credit card expenses are 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. Note that accounts payable notifies the requestor 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 requestor. If able to provide additional receipts and/or explanation for the disallowed expense, the requestor may resubmit the check request to the SR administrator, who approves and then forwards to accounts payable for processing.

The fully completed Check Request form must be signed by the principal investigator (or other designee) and SR administrator and submitted to accounts payable for processing.

Please note that the use of personal funds is one of three acceptable methods for the procurement of goods and services. Refer to Purchasing section III.C. for purchases using the purchase requisition process, and Procurement Card (PCard) Program section III.K. for purchases using the SDSU Research Foundation 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.


2. Vendor Invoice - Payment Authorization

For purchases initiated with a Purchase Requisition form, the vendor issues an invoice directly to SDSU Research Foundation's accounts payable department. A/P attaches a copy of the invoice to a Payment 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 payment request or invoice has been submitted; and the cost is appropriately chargeable to the fund indicated. The Payment Authorization form must be returned as quickly as possible to avoid late payments and/or credit hold. The PI forwards the signed Payment Authorization form to the SR administrator. The SR administrator 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 administrator. This action eliminates the need to forward the invoice to the PI for additional payment authorization. The vendor is paid after A/P receives an original invoice from the vendor that agrees with the packing slip (with appropriate signatures) and the originating Purchase Order.


3. Human Subject/Incentive Payments

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(s) are 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 check to an individual without a breach of confidentiality. However, in the event that an individual is paid $600 or more in a calendar year, the project is responsible for providing the name, address, social security number, and total amount paid to SDSU Research Foundation's accounts payable department so that a 1099Misc form is 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 his/her participation in a project. This population of people often does not have the means to cash a check, and 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 track (for 1099Misc purposes) human subject/incentive payments of $50 or more. In the event that an individual receives numerous payments of less than $50 and the total paid is $600 or more in a calendar year, the project is responsible for providing the name, address, social security number, and total amount paid to SDSU Research Foundation's accounts payable department. A 1099Misc form is issued at year-end. However, in cases where a project anticipates issuing human subject/incentive payments to any single individual are $600 or more in a calendar year, then 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. Please see Processing Non-payroll Payments to Nonresident Aliens Section III, Item J.

Procedures: Human subject/incentive payments may be processed using any one of the following forms.

These forms are used for many other types of payments, but should be used as follows for human subjects/incentive payments:

  • Check Request: The Check Request form is addressed directly to the recipient for an amount less than $50. This form does not require a social security number 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 check amount.

    OR

  • The Check 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.
    • 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 administrator must clearly indicate on Check Request that payments involve IRB APPROVED CONFIDENTIAL DATA. The advance must be cleared within 60 days and may be cleared with a payment listing by confidentiality system in use. 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, social security numbers, 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. Social security numbers 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, social security numbers, and total amount paid to each individual. Accounts payable issues a 1099Misc form to each individual who was paid $600 or more in a caldnar year.
  • Miscellaneous Income Payment Request: The Miscellaneous Income Payment Request is addressed directly to the recipient. This form requires a social security number 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 check amount.
  • Miscellaneous Income Payment Request for Multiple Recipients: The Miscellaneous Income Payment Request for Multiple Recipients is simply a timesaving device for making multiple one-time payments. This form requires social security numbers 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. Note: If there is knowledge that an individual may receive $600 or more in a calendar year, then this form must be used, regardless of the check amount.

Note: The Miscellaneous Income Payment Request and Miscellaneous Income Payment 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), entertainments 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.


4. California Income Tax Withholding/Non-employee Payments

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. Note that IRS form W-9 or Vendor Information Form  (Word Format, 107KB) should be submitted to accounts payable prior to processing any payments for vendor 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.
  • 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 director's 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, and
    • 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 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.

5. California Sales/Use Tax

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 very few circumstances under which we do not owe sales or use tax. For additional information please refer to San Diego State University Research Foundation SDSURF Sales Use Tax Guide  (PDF format, 230 MB)


6. Prepayment

If a vendor requires prepayment or does not accept a Purchase Order, project personnel determines the amount of required prepayment (including tax and all related charges), and submits a Purchase Requisition form, as well as a Check Request form 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 check request.


7. Distribution of Checks

Checks are normally distributed in either of two ways:

  • Checks are generally mailed via USPS 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 Check Request. The check recipient may pick-up the check upon presentation of proper identification. Note: 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.

8. Replacement Checks

  • Lost or Stolen Checks
    Project personnel must immediately notify the SR administrator if an SDSU Research Foundation check is lost or stolen. 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 check is returned to the SR administrator. The SR administrator returns the check to accounts payable for cancellation.
  • Checks not Received
    In the event that a check has not been received, the project personnel contacts the SR administrator to request a new check. The replacement check is generally reissued after a ten day waiting period from the date of issue.

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