Tax Information

Tax Services provides services for foreign visitor payments and taxation, employee and independent contractor relationships, personal taxability, scholarship compensation and more.

Certain ASU employee transactions result in additional compensation beyond the routine wage process. ASU, as a withholding agent, must deduct, report, and submit applicable taxes. These transactions are processed through payroll, where the extra compensation is added to regular pay and taxed accordingly.

ASU established policies and procedures on four such transactions, although there may be other situations that result in payments being made that accrue more than an incidental personal benefit to an employee, and that should be handled as taxable transactions.

Departments making third-party payments on behalf of employees should be sensitive to possible payroll tax implications and contact the tax unit of Financial Services for assistance in making appropriate taxability determinations.

Work authorization costs

To hire and retain top researchers and teachers, ASU sometimes uses outside legal services for permanent work authorization. The International Students and Scholars Center handles these services. Because employment-based permanent residency benefits the employer, ASU covers all associated costs, which employees cannot reimburse the department and are not taxed.

However, if the employee includes family members in the permanent residency application, those costs directly allocable to the non-employee, including individual application fees, are not employment-based costs and are taxable to the employee.

Departments covering fees for non-employees working with ISSO on permanent work authorization must contact Financial Services to process them as taxable fringe benefits. The Office of General Counsel approves all legal expenses and is responsible for notifying Financial Services of taxable benefits.

Fringe benefit resources

• Accountable plan rules.
• Moving expenses.
• Tuition reduction.

• Federal W-9 forms: Contact Rachael Golliet.
• Independent contractor information.
• IRS Publication 970 Tax Benefits for Education.
• Tax-exempt letter.
• Tuition statement IRS Form 1098-T and Student Business Services financial aid and tuition help.

Visit the Financial Services forms webpage for additional tax-related forms.

ASU must pay sales or use tax on most of its purchases and collect sales tax on its commercial transactions with customers external to the university, following the state of Arizona’s statutes. Review FIN 108 for more information on sales tax.

Tangible goods, not services, are subject to state and city sales tax unless an exemption applies and is properly claimed. ASU’s most common exemption is for research and development machinery and equipment. Refer to FIN 120 for more information on how to claim an exemption and the restrictions that apply.

ASU units that conduct sales must charge state sales tax and properly account for the sales and tax collected following arrangements made with Tax Services. 

Use tax applies to out-of-state purchases delivered to Arizona when Arizona sales tax isn’t collected, including Purchasing Card transactions. Use tax is assessed via the P-Card verification process or on the payment of the supplier invoice in Workday.

Review the stipend guide to determine whether to process a stipend payment through the Workday or the student financial system.

All income received by the student or participant may be treated as taxable income regardless of stipend classification. However, amounts classified as scholarship stipends are eligible for potential exclusion from income under Internal Revenue Code Section 117 for amounts paid for tuition, required fees, course books and necessary school supplies. Compensatory stipends are not eligible for potential exclusion.