PCS PCard Policy only allows the use of the University PCard to purchase Tangible Items from foreign vendors for items such as goods, supplies, or equipment. 

It prohibits the purchase of intangibles (unable to be touched, not having a physical presence) from foreign vendors. This is because the Bank that issued the PCard is only required to tax report purchases from U.S. vendors. And the University remains responsible for tax reportable purchases from non-U.S. vendors. 

The Request for a PCard Tax Exception procedure was created to allow for these intangible purchases. The PCard Tax Exception Request approval documents for tax purposes and allows Departments the freedom to make intangible purchases from foreign entities while keeping the University compliant with applicable federal tax Code, regulations, and official guidance. 

The PCard Tax Exception is a  "one-time-only" exception specific to each separate purchase of an intangible from from foreign entities or individuals. Some examples of intangibles are software subscriptions, access to databases, services, conferences, training, software, membership access to databases, images, database access, subscriptions, services, and that includes any purchases that will not be shipped to the University. .

The PCard Tax exception is obtained from Business Affairs Tax Services via an emailed request to jgermack@uoregon.edu. It is a one time only exception for one purchase or if the request is for monthly payments is only applicable on a calendar year basis.

**Because Federal tax reporting is based on Calendar year activity, requests for an annual exception of monthly payments can only be approved per 'calendar year'. So, when an annual subscription payment is not paid 100% upfront and the monthly payments are being made in two separate calendar years, then two separate PCard Tax exception requests will be required. (Example: monthly payments of $100 foreign software subscription from March - February.  The two requests would be for 10 months at $1,000 and 2 months at $200.)  A PCard Tax exception is only valid for activity between January 1st and December 31st of any one calendar year.

PCard Tax Request Email Format

• Subject line of email contains 'PCard Tax exception request" & Vendor's name and UO ID number. 

In addition to the subject line, in the body of the email:

• the vendor's name and UO ID number, 
• Last four digits of the PCard being used
• the amount must be in USD and date of the purchase (or a estimated date range), the exact U.S.Dollar amount is required.
• Required- attach a copy of the P.O., PSC, invoice, or order form. 
• Provide an index to charge for the federal taxes. Grossed up federal taxes of 42.857% may apply requiring an index to charge.
• Note: Providing a website link does not replace the required attached invoice or order forms website.

The  foreign vendor does not have a Banner Vendor ID number

1. The vendor is required to have a UO Vendor Number.  
2. When the foreign vendor is not yet set up in Banner A/P, the department must obtain a W-8 form from them or their website, and set them up per Accounts Payable procedures. See new Vendor-setup secure transmission of W-9/8 forms
3. AFTER they have a Vendor Number, send an email to jgermack@uoregon.edu  with  the email subject line "Request for PCard Tax Exception -vendor's name and Vendor ID Number".

Foreign Vendor's W-8 Form does not include a formal Request for Treaty Benefits

1. If it is determined there is applicable taxes on the purchase, your department will be required to provide an index to charge for the taxes. 
2. There is no way to withhold federal taxes from a PCard purchase.
3. The grossed-up tax rate is 42.857%. (.30/(1-.30))
4. A Banner JV will be created by Tax Services to charge the expense to the purchasing department's index.  
5. If the department is unable to obtain a W-8 form, for any reason, an exception request will require, in addition to the other information, a pdf attachment of your department's email sent to the vendor requesting their W-8 form, their full name and a physical address, and an index to charge for the 42.857% grossed-up tax, if it is applicable.

After PCard Tax Exception approval is obtained from Tax Services

1. Once approved: a PCard Foreign Vendor Intangible Exception Request Approval will be emailed back to you.   
2. You may then make the purchase with your PCard. 
3. The exception is required to be uploaded to Concur attached to the expense line in question as an additional receipt .pdf image.  
4. Note: this approval is a one-time purchase only exception, specific to vendor, specific to the date, and specific to amount of the purchase.  Any other purchases from the same vendor will require additional exception requests.  

Be sure to verify with Foreign Entity that they can receive AND cash a paper check issued by the University of Oregon and mailed to their permanent address. Mailing systems are not always reliable and there are some countries that are not accepting mail.  A viable alternative is to send payment in a bank wire.  See Accounts Payable overview on Outgoing Payments to Foreign Countries.

• Payments for services provided outside the U. S. by Foreign Entities and individuals are considered foreign source, and are not subject to U.S. reporting or withholding.
• Payments for tangible goods or products are not subject to U.S. reporting or tax withholding.
• A W-8 form is required for vendor set up, so the University can produce a payment document.
• Please Follow A/P Vendor Setup procedures.
• Services provided inside the U.S. are subject to U.S. Taxation which include reporting and/or tax withholding if no treaty benefits were formally claimed by the vendor.
• Payments for Royalties, Software licenses, Databse access, right to use, or licenses purchased from foreign entities and used inside the U.S. are subject to U.S. taxation.
• Awards & Prizes are subject to 30% tax withholding.  There are no treaty benefits for this type of income.
• U.S. tax regulations include tax reporting and 30% tax withholding or 42.857% additional tax gross up, unless Treaty Benefits are not available and formally claimed.  Or unless the vendor provides a valid W-8ECI or W-8EXP.
• Vendors set up as Foreign Entities, non-individuals, are not eligible for reimbursements or third-party payments for Travel Expenses.

While requesting a W-8 form from your vendor is the perfect time to verify if the Entity is able to receive a paper check in the mail or if a wire is requested.

Collect the appropriate W8 form from the organization and send to Business Affairs Accounts Payable via a Secure One Drive. There are four W8 forms available for foreign entities (non-individuals). Note: a sole proprietor, not a corporation or partnership, must use the W-8BEN or W-8ECI form.  The vendor may determine the appropriate form by following the criteria outlined at the top of each of the forms or their instructions. The W-8BEN-E form is most commonly used by foreign entities to claim foreign status and treaty benefits. The University of Oregon Business Affairs department cannot give exceptions to IRS W-8 form requirements. Incorrectly or partially filled out W-8 will must be corrected before a vendor can be set up.

NOTE: W-8 forms that contain any information that is written or typed in a manner that is inconsistent with the rest of the form are not acceptable and will be returned to the initiating Department. 

W-8BEN: This form can only be used by Individuals or Sole Proprietorships See Payment Process for International Individuals

W-8BEN-E: Used primarily by entities to claim foreign status and to claim treaty benefits.

• Entities not eligible for the other W8 forms should use the W-8BEN-E.
• A foreign entity from a country that has negotiated a tax treaty with the U.S. that has an article contained that exempts the type of income they are providing, will need to complete a W-8BEN-E to claim treaty benefits.
• A Foreign or a U.S. tax identification number is required for exemption from tax withholding.
• All fields in line 14-15 must be completed to claim treaty benefits exemption.

• W-8BEN Form can also be used by business owners who are sole proprietorships. Their business name goes on line 7 of the form.

• The only Valid version is Rev. October 2021, top left of form.

• **There is space for two addresses, vendor's foreign address and a mailing address, but only their permanent address outside the U.S. is required.
• A U.S. Taxpayer ID number or Social Security Number is Not required.
• the foreign Taxpayer ID must be provided line 6a or the box checked line 6b
• the DBA business name is entered on  line 7
• their Date of Birth is required on line 8
• the box above the signature must be checked,
• the signature cannot be typed in. It must be a wet signature or electronic software signature

W-8BEN-E Form (Businesses, occasionally individuals)

• The only Valid version is Rev. October 2021, top left of form.
• **There is space for two addresses, vendor's foreign address and a mailing address, but only their permanent address outside the U.S. is required.
• The rest is REQUIRED to be filled out:
• the Foreign Taxpayer ID Number (TIN) must be provided on Line 9b . Example: if the vendor is from Germany, their Foreign TINhis would be their Germany Tax ID Number.
• W-8BEN-E requires one box be checked on BOTH Lines 4 and 5
• the box above the signature must be checked,
• and the signature cannot be typed in.
• if Treaty Benefits Part III are filled in, please TEAMS me or email Joy Germack jgermack@uoregon.edu to set up an appointment before sending W-8BENE to A/P so we can discuss applicable treaty article and its unique requirements.

W-8ECI: Used primarily by the payee or beneficial owner that all the income that is listed on the form is effectively connected with the conduct of a trade or business located within the United States.

• The type of income must be identified on Line 9 of the form to qualify for exemption. If it is not listed we are required to obtain from the entity a different type of W8 form.
• A U.S. tax identification number is required for exemption from tax withholding.

W-8EXP: Used by the following entities to claim exemption from tax withholding, foreign governments, foreign tax exempt organization, foreign private foundation, govt. of a U.S. possession, or foreign central bank of issue.

• The entity must be claiming exemption under IRS code 115(2), 501 (c), 892, 895 or 1443(b). Otherwise they need to file a W-8BEN or W-8ECI.

W-8IMY: Used by an intermediary, a withholding foreign partnership, a withholding foreign trust, or flow through entity.

• Copies of appropriate withholding certificates, documentary evidence, and withholding statements must be attached to the W-8IMY as well.

The IRS 1042-s form will be issued to any international individuals or foreign entities that either had federal taxes withheld or claimed Treaty Benefits during a calendar year. The University of Oregon is required to mail the 1042-s form to both the IRS and to the Recipients by March 15 of the year following the calendar year in which the income subject to reporting was paid. If March 15 falls on a Saturday, Sunday, or legal holiday, the due date is the next business day.  The University will make every effort to have these forms in the mail sooner than the due date. 

1042-s forms are issued to foreign vendors, individuals and entities, are issued by Business Affairs Tax Services. A vendor might receive more than one type of 1042-s form for the same calendar year.

All taxes withheld are sent to the IRS in the name of the beneficial owner of the payment.  The 1042-S form is used to tax report the gross amounts paid to and taxes withheld from foreign persons or foreign entities that are subject to income tax reporting, even if no amount is deducted and withheld from the payment due to a treaty benefit.

The recipient may use the information on the 1042-s form to fill out a U.S. tax return and request a tax refund from the IRS.    https://www.irs.gov/forms-pubs/about-form-1042-s

Last updated 09/04/2024