Honorarium payments, including exceptions to the $1,500 payment limit, require advance approval by the President, Vice Presidents, Vice Provosts, or Deans. Such individuals are responsible for determining that budgeted funds are available for the payment and that it complies with this Policy and other University policies.
Sponsored project funds and other restricted funds may not be used for the payment of an honorarium unless specifically authorized in the contract or grant agreement or other document governing the use of the funds.
An honorarium paid to an employee shall be paid though the University’s payroll system as a stipend payment reportable on Internal Revenue Service (IRS) Form W-2 and subject to withholding for applicable income, social security, and Medicare taxes. Honorariums paid to a nonresident alien employee are reportable on IRS Form 1042-S if the payment is exempt under an income tax treaty. To initiate an honorarium payment to an employee, the department must complete an Electronic Personnel Action Form (EPAF) describing the nature and details of the payment. The EPAF is then transmitted to Payroll Services via the Banner HR System.Non-Employees
The required method of payment for paying an honorarium to a non-employee is a Payment Request, which must be initiated by the department through the Concur Reporting System. A payment will be issued within 10 business days after Business Services receives a properly approved Payment Request, including an IRS Form W-9 with the individual’s taxpayer identification number.
The University Purchasing Card may be used for making honorarium payments to a non-employee equipped to accept such payments.
If the total honorarium payments made to a non-employee equal $600 or more during a calendar year, the payments must be reported on IRS Form 1099. Such payments are generally not subject to withholding. The aggregate amount of all honorarium payments made to a nonresident alien are reportable on Form 1042-S and are subject to withholding at a standard federal rate of 30%, unless a treaty exemption applies. Honorariums paid to California nonresidents are also subject to 7% withholding if the total payments made to the individual are more than $1,500 for the calendar year.
As a general rule, an individual who assigns or transfers compensation for personal services to another individual or entity is not relieved of his or her income tax liability, regardless of the motivation behind the transfer. Thus, an honorarium earned by an individual is reportable as additional income to the individual performing the services, even if the actual payment is made to another party such as a charity or the University itself.
An individual may, however, indicate in writing to the University before
the services are performed that the person declines the honorarium and requests (but does not demand) that the honorarium be:
- Donated by the University to a specific charity;
- Retained by the University and used by the University in a certain manner (e.g., to fund scholarships or support a particular program or department); or
- Retained by the University with no suggestion as to how the funds should be used.
Because the individual declined the honorarium before it was earned, the person will not be treated as receiving taxable income. The University will consider and may choose to abide by the individual’s request, but it is not required to do so and at all times retains the full discretion and control as to how the honorarium funds declined by the individual are to be used. In no event, should an honorarium declined by an employee be paid into the employee’s research account or other fund controlled by the employee. Honorariums donated to a charity must be contributed in the name of the University of San Francisco. Payments may not be made, however, to a political party, campaign, committee, or group engaged in any attempt to influence the general public with respect to legislative matters, elections, or referendums. See Conflict of Interest Policy
A sample statement that may be included in a letter to an individual who requests that an offered honorarium be donated to a charity or retained by the University is provided in Appendix A
Departments are responsible for providing sufficient documentary evidence to support the business purpose of all honorariums paid by the University. Documentation should be in the form of an offer letter or e-mail inviting the individual to participate in a University activity and describing the services to be performed and the amount of the honorarium payment. Additionally, an event flyer or announcement should be included for a speaking engagement that includes the date, time, and topics discussed.
A violation of any portion of this Policy may result in disciplinary action, up to and including termination of employment and/or legal action. In addition, an employee may be personally liable for any amount expended in violation of this Policy.