Per IRS regulations, certain types of purchases may require tax withholding if purchased from an international (foreign) vendor. If p-card is used it may result in additional cost (both tax and penalty) to your department.
P-Card payments to foreign vendors for software and services listed below are typically taxable transactions:
- Royalties – This includes the right to use images, art or text, music or music files, or other intellectual property
- Web based services and subscriptions
- Publishing services (if service location is not identified)
- Services performed by foreign vendors in USA (This includes conference registration fees paid to international vendors for conferences held in USA)
To avoid additional cost to your department, please confirm the vendor’s status (domestic or foreign) before completing your p-card purchase with this two-step method:
Step 1: Check the list of P-Card Taxable Foreign Vendors. This is a shared Google doc updated monthly by University Tax Reporting; it provides a list of p-card purchases by vendor which resulted in additional tax and penalty payment by department. If your vendor is listed, they have been identified as foreign and your purchase may require withholding.
Step 2: If the vendor doesn’t appear on the above list, email the vendor name and address to firstname.lastname@example.org and request verification of “Vendor Status -foreign or domestic”.
If it’s determined that the vendor is foreign, payment for software and services should be processed by Purchasing Requisition, not p-card. This will allow the university to withhold tax in advance of payment per IRS regulations.
Questions regarding International Vendor purchases may be directed to:
Suzy White, Manager, Boise State University Tax Reporting (208) 426-2543 email email@example.com