Professional Services / Consultant Payments
Independent contractor payments and Sponsored consulting agreements are effectively the same except for the type of accounts that they are charged to and forms required. Independent contractors and consultants (henceforth consultants) can be used to acquire short-term specialized services from individuals for a specific purpose (e.g. editing manuscripts, translations, various consulting services, software programming, etc.).
The consultant must enter into a contract with the University which stipulates the nature of the work to be performed and the terms of payment through a procedure very similar to the one used for issuing subcontracts to vendors or outside institutions. Current employees cannot be consultants on a sponsored award. Approval from the payroll department is required before hiring a former employee as a consultant.
The consultant will need to complete a fully executed sponsored consulting agreement prior to beginning work, so please plan accordingly. The PI should design a statement of work and a budget that breaks down the costs required to complete the statement of work within the award period (parts of this may need to be done with the prospective consultant). The Financial Administrator sends this, along with PI concurrence, to URA for review. After any outstanding issues are addressed, the sponsored consulting agreement is forwarded to the PI for signature and two signed hardcopies are returned to URA for institutional endorsement. The Financial Administrator sends two copies of the endorsed agreement along with the contractor questionnaire, debarred vendor certification, W-9, and W-8BEN-I to the consultant. The consultant must complete and sign the consulting agreement and the attached forms and return them to URA, along with a client list and any additional required documentation (e.g. supporting visa/immigration documents). The consultant should retain one copy of the agreement for his/her records. A copy of the fully signed agreement will be distributed by URA.
When requesting payment, the consultant should use the invoice forms provided in the consulting agreement package and complete all relevant fields. The consultant cannot bill the University for more than the amount established in the consulting agreement and any attendant amendments or in advance for work not yet performed. If necessary, an updated contractor questionnaire and tax documents should be supplied if changes have occurred since the agreement was completed.
When processing the first payment, an ePayment request must be completed accompanied by the invoice, a copy of the consulting agreement (including the statement of work and budget), applicable tax forms, debarred vendor certification, and contractor questionnaire. Subsequent ePayments need an invoice and consulting agreement only.
Note: Funds for a consultant should be included in the proposal budget. If the need is discovered after the award is issued, the PI should consult the program officer before hiring a consultant. If the consulant is a non-resident alien, ensure that it is allowable under the terms of the award.
University Funded Accounts
Consultants can be paid from non-sponsord accounts as well. Employees of University of Chicago currently or within the past 12 months, may perform consulting activites at the University, but cannot be paid like a consultant. Such indivuduals would need to be paid via a Monthly Extra Service payment or Bi-weekly Additional payment.
The consultant must execute a contract, complete the contractor questionnaire, sign the debarred vendor certification, a send a client list prior to beginning work. To receive payment, the consultant must supply an invoice, a W-9 or W-8BEN-I (along with any other supplemental tax documentation), and a client list.
Entertainers are a special category. Any contract with an entertainer should be reviewed by Anthony Belarmino, 2-1953 to ensure that it can be honored.
List of Individuals Who Cannot Be Paid as Consultants
- Employees and Recent Former Employees – If the service provider you wish to hire is a current or recent former employee (previous 12 months), he or she will usually be paid as an employee and not as an independent contractor, especially under the following situations: when the service provider will be working exclusively for the university; when the service provider will be routinely performing a service similar to one presently being performed by another university employee; when an employee of the university is seeking to provide similar services elsewhere in the university.
- Registered University of Chicago students
- When the individual (service provider) will be working exclusively for The University
- Individuals or entities that have been "debarred or excluded" from doing business with the federal government – As a recipient of federal funds The University of Chicago may not contract, purchase, or make payments to a vendor or party (person or independent contractor) that has been identified as debarred, suspended, or excluded from doing business with the Federal Government. For additional information please refer to the following Procurement and Payment Services web page on Debarred or Excluded Vendors.
- Individuals who are providing instruction or teaching services – Since education is one of the University's primary missions, the IRS would always view these types of payments as employment.
- Citizens of Other Countries – Individuals who do not have Resident Alien status (i.e. individuals who do not have Alien Registration Receipt Cards or "Green Cards") cannot work as Consultants. Exceptions to this rule are: (1) TN VISA holders, (2) professional entertainers, and (3) performers. If you are requesting consulting services from an individual who is not a U.S. Citizen or Permanent Residents, contact the Office of International Affairs.
Exception to Rule: Special Interest "Hobby Payments" – Payment to an employee for an activity, which could be considered a hobby or recreational vocation. Cannot be related to the regular duties performed by the employee at the university. Whenever in doubt, contact the Payroll Department prior to discussing and/or negotiating payment terms with the service provider.