I. Purpose
The purpose of this policy is to establish uniform guidance for payments made by UNC Asheville to individuals in research projects, surveys, or studies to ensure compliance with federal income tax withholding requirements and proper reporting of payments to the Internal Revenue Service (IRS).
II. Scope
This policy shall pertain only to research participants including, but not limited to, UNC Asheville faculty and staff, students, and non-University employees.
III. Policy
Research participant payments must comply with current and existing University policies and procedures in the areas of finance, human resources, and Institutional Review Board (IRB). The policy requires compliance with requirements outlined by the IRS.
IV. Definitions
Institutional Review Board (IRB) – A Committee(s), appointed by the Vice Chancellor for Academic Affairs, that meets the membership requirements codified in federal regulation and University policies and procedures established and maintained to provide ethical oversight of human subject research conducted by UNC Asheville approved research programs.
Protocol – The formal design or plan of an experiment or research activity specifically submitted to an IRB for review and approval/denial.
Research Participant – Research participant is defined as: living individual(s) about whom an investigator conducting research obtains: (1) data through intervention or interaction with the individual; or (2) identifiable private information.
Research Participant Compensation (“Compensation”) – Providing something of monetary value to a research participant. Payments may include but are not limited to money, gift cards, stipends, travel reimbursement, etc.
V. Procedure
A. Research Participant Payment Guidelines
Payment for participation in research may not be offered to the Research Participant as a means of creating undue influence, where it might cause someone to assume risks they would not otherwise assume. Rather, it should be a form of recognition for the subject’s investment of time, loss of wages, or other inconvenience incurred.
- Payment arrangements must be approved in advance by the IRB. Principal Investigators must document all forms of incentives and compensation within the protocol.
- Protocols must have IRB approval prior to distributing incentives and compensation to Research Participants.
- Monetary incentives and compensation should be based on the research subject’s time allotted to and reasonable expenses incurred during the research study.
- Incentives and compensation may include reimbursements for parking, lodging, or transportation.
Payments should not be withheld to ensure of a research participant’s completion of the study. In most cases involving long term participation, researchers should give a reasonable prorated payment to avoid the appearance that the investigator is coercing the Research Participant to continue in a study or is punishing the Research Paticipant. The complete schedule of the payment plan should be clearly documented within the protocol and informed consent reviewed by the Research Participant.
Assuming they meet the qualification for the study, faculty and staff members may participate as human subjects in research to the extent that their participation does not interfere or conflict with work responsibilities. Faculty, staff, and student workers cannot be made to participate as a research subject unless it is codified in their position description.
B. Taxability
Incentives and compensation constitute taxable income for U.S. residents and non-residents. The participant’s residency status and relationship to the University will determine the method of payment and documentation needed to process payments. U.S. residents’ taxable payments totaling $600 or more in a calendar year are reportable to the IRS using a Form 1099-MISC.
C. Purchasing and Payment Policies and Procedures
1. Incentives
Incentives are low value payment instrument and/or good given to participants to entice them to engage in a research study. Incentives must be provided to all persons approached about study participation, regardless of whether they choose to participate.
Incentives include gift cards, gift certificates, intrinsic personal property, and other items of value less than $10.00. Individuals receiving a total of $200.00 in incentives per calendar year must file a W-9 with University accounts payable.
Documentation is required for all incentives distributed by the researcher. Finance requires an Incentives Disbursement Log to document incentive transactions. Researchers must file a completed Incentives Disbursement Log with University as supporting documentation for a check request or purchase order request. Researchers may absorb costs for incentives where documentation is incomplete or not provided.
The University, researcher and research participant have a responsibility to document and report payments received from sponsored programs to the Internal Revenue Service.
2. Compensation
Compensation is a payment to Research Participants provided during/after engaging in the covered research activity. The researcher is compensating the participant for time and services related to a given study. Compensation may include gift cards, gift certificates, personal property, travel reimbursement, and other items of value.
Compensation has no set monetary limit under this policy.
There are two instruments available for researchers to compensate research participants. These include the UNC Asheville Research Participant Payment Request (RPPR) or UNC Asheville Receipt of Non-Payroll Compensation Form (RNCF). The type of disbursement will determine the form(s) used. Researchers may also use both forms for one participant depending on the compensation.
When receiving monetary compensation, the researcher will need to complete the RPPR and attach the appropriate IRS form based on residency status (i.e., W-9, W-8BEN, etc.). Finance WILL NOT process any claim for compensation without these documents completed and on file with Finance. Coordination with Finance is strongly recommended to prevent disbursement delays.
When receiving items of value in lieu of monetary payment, the researcher must have Research Participant complete the Receipt of Non-Payroll Compensation Form (RNCF) and attach the appropriate IRS form based on residency status (i.e., W-9, W-8BEN, etc.). The researcher will need to document distribution of valuables using the Compensation Distribution Log. Finance will reconcile the RNCF with the Compensation Distribution Log. Discrepancies between the RNCF and Compensation Distribution Log will generate an internal audit of program. Findings may result in the University taking actions against the violator. Coordination with Finance is strongly recommended.
Research participants should be informed that any personal data collected is needed for the University to meet government reporting obligations as part of the disclosure process. The University will take the necessary precautions to keep any personal information secure. Participants may be given the opportunity to participate without receiving payment if they do not wish to provide personally identifiable information.
RPPRs are required as documentation for receipt of participation, regardless of the payment type or the amount of payment. If a research participant’s total compensation from UNC Asheville equals or exceeds $600, Finance will issue an IRS Form 1099, Miscellaneous Income.
3. Nonresident Alien
There are various tax and policy issues that must be addressed regarding payments to known nonresident nationals (including nonresident students). Payments made to Human Subjects who are nonresident aliens must be paid by check and are reported on Form 1042-S, Foreign Person’s U.S. Source Income Subject to Withholding, regardless of dollar amount. All payments to nonresident aliens are subject to 30% federal income tax.
The project director / principle investigator will manage all incentives given to nonresident foreign aliens as compensation. Under no circumstance can the University’s incentives logs be used to track items given to nonresident foreign human subject participants.
4. Expense Coding for Research Participant Compensation
All payments to research participants should use one of the following object codes:
- 719750 – Compensation to research participants to sponsored project budget category “Subject Compensation Fee”
- 727530 – Incentives to research participants to sponsored project budget category “Subject Incentive Fee”
5. Compensation Options
Payments to research participants are to be paid only by the methods listed below without prior approval from Purchasing. Employees are not to pay participants using personal funds.
a. Payments to Individuals by Check
Payments of any amount can be processed on the appropriate Research Participant Payment Request (RPPR). A check will be issued directly to the research participant. Per IRS regulations a W-9 Form or W-8BEN must be provided for each individual before payment will be made. A UNC Asheville employee participating as a human subject, must complete a payroll request form to be paid through the payroll process.
The Special Funds Accountant will audit RPPR and forward approvals to Accounts Payable for payment. Checks will be mailed directly to the research participant.
b. Gift Cards / Gift Certificates
Using negotiable items, such as gift cards or gift certificates, requires very strict accountability. The IRS considers gift cards/certificates to be cash equivalents, thus the same tax issues apply to these as with traditional payment methods. Negotiable items must be treated like cash, and researchers are accountable for their safekeeping and documentation of their distribution.
Researchers should complete an Authorization for the Purchase of Gift Cards / Gift Certificates, Incentives, or Prizes form before acquiring these items. If the authorization is made under a sponsored program, the researcher will submit the authorization to the Special Funds Accountant for review and processing. If the request has no external sponsor, the researcher will submit the authorization and IRB approval to their department chair for review. Upon approval of non-funded activity, the department chair will submit form to Accounts Payable for processing.
Finance will cut a check in the amount requested on the Authorization to be used by the researcher to purchase items. When reconciling the purchase against the advance, Accounts Payable will require an original itemized receipt from the purchase. Failure to provide an original itemized receipt could result in the researcher reimbursing the University.
It is important to note, the investigator assumes all risks associated with purchasing gift cards/gift certificates. This is important when it comes to reconciling the sponsored program’s financial transactions. Undistributed cards will be returned to Accounts Payable. Costs of undistributed cards/certifications will be managed in accordance with UNC Asheville Policy 114, Sponsored Program Bad Debt. It is extremely important for researchers to avoid over-purchasing these items.
c. Travel Related Expenses
Travel reimbursements are highly regulated. Contact the University’s travel accounting specialist or special funds accountant for how best to proceed with a proposed travel reimbursement within a study protocol.