Financial Services Manual (FIN)

Effective: 11/1/2008

Revised: 3/1/2010

FIN 421–05: Human Subject Payments

Purpose

To describe the policy for payments made to individuals who participate in research projects as human subjects and for payments made to individuals for research incentives as human subjects

Sources

Internal Revenue Code

University policy

Policy

Payments to individuals participating as human subjects in authorized ASU research or to individuals as research incentives are typically modest in amount, $100 or less. Such payments may be in the form of a check, cash, cash equivalent, or noncash incentive. For large studies, or when confidentiality is part of the human subject protocol approved for the research, subject pay can be disbursed from a checking account established with an expense advance.

Cumulative payments from all research projects of $600 or more to a single individual in a calendar year will result in tax information reporting to the IRS by the Tax Unit of Financial Services via issuance of Form 1099-MISC. The department conducting the research is responsible for determining when the $600 threshold is reached and providing the Tax Unit of Financial Services with all necessary documentation required for proper tax reporting of human subject payments to the IRS.

Payments to ASU employees generally must be handled through the payroll process for tax withholding and reporting purposes. However, when ASU employees participate as subjects in a research project that is unrelated to their employment, subject pay treatment is permitted.

Procedures

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Payments from Single Research Project

Payment Voucher Process

When cumulative payments to a single individual are expected to total $600 or more in a calendar year:

The department is required to obtain a completed ASU Substitute W-9 for vendor setup. Payment is requested on a PV document with expenditure code 7310 40.

When cumulative payments to a single individual are expected to total less than $600 in the calendar year:

The SUBJCTPAY vendor code may be used and no vendor setup is required. Payment is requested on a PVQ document with expenditure code 7310 40.

Documentation Required

Documentation to be attached to both types of payment requests listed above is unique to the research project and is usually already included in the research design as part of the informed consent process. Such documentation must include the following:

1. subject name
2. whether the individual is a U.S. citizen, permanent resident, or a nonresident alien
3. the name of the research project
4. the dates(s) of participation
5. the amount the subject is receiving as a subject fee payment
6. the amount and details of any expense reimbursement, dated recipient signature

   and

7. dated signature of an ASU project person with responsibility for records retention.

Payments to nonresident aliens will be subject to the tax withholding and reporting rules described in FIN 425, “Payments to Nonresident Aliens.” A funding source for any tax payment must be identified.

When a research project subject is only being reimbursed for out-of-pocket expenses, such as mileage and parking fees, the EXPREIMB vendor code may be used and no vendor set up is required. Payment is requested on a PVQ document with expenditure code 7310 02.

Cash Payment Process

Cash Payments from a Sponsored Account Expense Advance

The Office of Research and Sponsored Projects Administration (ORSPA) policy RSP 503–02, “Sponsored Project Cash Advances,” covers the use of a sponsored account expense advance for subject payments. Special circumstances warranting the use of local funds may be referred to Financial Services for consideration and, if approved, the same controls and procedures as described in RSP 503–02 would generally apply. Reimbursement of expense advance should be requested using a PV document with expenditure code 7310 96.

Cumulative cash payments from an approved expense advance to a single individual from all research projects in a calendar year of $600 or more must be reported to the Tax Unit of Financial Services. Such report must include the required documentation from above (see Payment Voucher Process) as well as a completed ASU Substitute W-9 or acceptable substitute containing the individual’s federal identification number. For ASU students or employees, the ASU ID may be provided instead of the Substitute W-9.

For research studies subject to confidentiality requirements, only reportable payment information must be reported; all confidential documentation must be retained at the project level. Additional accommodation to confidentiality requirements should be discussed with the Tax Unit of Financial Services.

Cash payments to nonresident aliens will be subject to the tax withholding and reporting rules described in FIN 425, “Payments to Nonresident Aliens.” A funding source for any tax payment must be identified.

Cash Equivalent Payments

Some human subject research project administrators may determine that an appropriate research incentive is a gift card or gift certificate, which are considered cash equivalents. This means that university cash handling policies apply, i.e., adequate physical control of the items must be maintained at all times by an identified ASU fund custodian who is responsible for securing, receipting, and accounting for the cash equivalents.

The cash equivalents must be purchased using the payment voucher (PV) process; the university purchasing card may not be used. In order to be approved by Financial Services, the PV must be accompanied by a justification for the use of cash equivalents, a description of the internal controls in place to manage the cash equivalents, including disposition plans for gift cards or certificates that are not used for research project purposes. The fund custodian must be identified and agree to serve in such capacity. The justification must be approved at an administrative level appropriate to the circumstances (e.g., project director or assistant dean).

Cumulative cash equivalent payments from all research projects of $600 or more distributed to a single individual in a calendar year are subject to the tax reporting rules described above and the fund custodian is responsible for reporting such distributions to the Tax Unit of Financial Services. Such a report must include the required documentation from above (see Payment Voucher Process) as well as a completed ASU Substitute W-9. If the subject is an ASU student or employee, the ASU ID may be provided instead of the Substitute W-9.

Cash equivalent payments to nonresident aliens will be subject to the tax withholding and reporting rules described in FIN 425, “Payments to Nonresident Aliens.” A funding source for any tax payment must be identified.

Noncash Payments

Some human subject research project administrators may determine that an appropriate research incentive is a noncash item, such as a t-shirt. For noncash items under $600 in cumulative value, the purchase and distribution of such items must be documented as to public purpose, but no specific identification of individuals is required. Cumulative noncash items of $600 or more in value from all research projects to a single individual are subject to the same requirements as cash equivalent payments and must include the required documentation from above (see Payment Voucher Process) as well as completed ASU Substitute W-9. If the subject is an ASU student or employee, the ASU ID may be provided instead of the Substitute W-9.

Noncash payments to nonresident aliens will be subject to the tax withholding reporting rules described in FIN 425, “Payments to Nonresident Aliens.” A funding source for any tax payment must be identified.

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Payments from Multiple Research Projects

The Principal Investigator (PI) for a research project must confirm with the individual that the individual is not receiving any other income payments from ASU, such as human subject pay from other research projects or compensation for services (employee or independent contractor) during the calendar year, and document as such. If the individual is receiving such payments or if the PI is unable to confirm and document as such, any human subject payment or series of payments totaling $100 (as opposed to $600) or more would be subject to the reporting requirements to the Tax Unit of Financial Services. Such reporting to the Tax Unit of Financial Services must include the required documentation from above (see Payment Voucher Process) as well as a completed ASU Substitute W-9. If the subject is an ASU student or employee, the ASU ID may be provided instead of the Substitute W-9.

Cross-Reference

For more information on human subjects in research, see the Research and Sponsored Projects Policies and Procedures Manual (RSP)—RSP 201–01, “Human Subjects in Research.”

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