Virginia Tech® home

Accounts Payable - Procedure 23715c

Procedure 23715c: Selecting and Paying Human Subject Participants

Contacts and revision dates:

  • Date: 03/15/2023
  • Status: Final
  • Last Revised: 03/15/2023
  • Last Reviewed: 07/01/2027
  • Department: Accounts Payable
  • Procedure Owner: Accounting Manager 

Table of Contents

  1. Overview
  2. Selection of Human Subjects
  3. Payment to Human Subjects
    1. Direct Payment    
    2. Loan or Personal Payment
    3. Controller's Office Responsibilities

Overview

Research project results are often dependent on utilization of human subjects for testing, tasting, reacting, dieting, exercising, responding to various stimuli, etc. As an incentive to encourage participation in the research, some grants provide funds for payments to the human subjects. These payments may be monetary (cash or gift cards) or non-monetary (VT logo items, etc.). The Internal Revenue Service (IRS) considers any payments made to individuals to be taxable; gift cards are viewed as a cash equivalent.

Gift card stock purchased must be a valid expenditure against the grant. The inventory of gift cards must be adequately controlled, issued, and accounted for. Gift cards cannot be purchased by using the P-card or the HokieMart because documentation of who the gift cards were disbursed to must be available prior to charging a grant fund. The procedure in place to accommodate the purchase of gift cards is to open a petty cash disbursement fund through the Bursar's Office. As the cards are used, the fund may be replenished by following the instructions under the heading below titled "Department responsibilities when the faculty member secures an Accounts Receivable loan from the Bursar’s Office or uses personal funds".

When such payments are made, the disbursements are handled as payments to independent contractors, not payments to employees for work performed. Human subjects are not paid as employees since the service provided is outside the scope of their normal job responsibilities within the University. All human subject payments are potentially taxable to the recipient, so tax reporting information will be required.

Selection of Human Subjects

Participants may be:

  1. Full and part time employees of the university.
  2. Full and part-time students of the university
    1. It has been determined by the Research Division and Designated School Officials for graduate and undergraduate students, that the eligibility for all students to participate in research studies is an integral part of the student experience. This includes students of all ethnic groups and citizenship categories. If participants are not US Citizens or Resident Aliens, please use caution to ensure that immigration regulations are not violated. Please contact the International Tax Specialist (in Payroll at (540) 231-7586 or finsadmin@vt.edu) if you have questions regarding participation of a non- resident.
    2. Students who are on financial aid assistance.
  3. Non-university affiliated individuals.

Participants may NOT be: Employees, graduate students, or undergraduate students who are funded by the research grant to which the human subject payments will be charged as this is a conflict of interest. Departments should confirm appropriate usage of research funds.

Payment to Human Subjects

Direct Payment

Department responsibilities when payments are made via Virginia Tech check or direct deposit.

  1. The department should obtain approval from the Institutional Review Board (IRB). (Sponsored Programs procedures should be followed.)
  2. Select participants in accordance with this procedure.
  3. Contact the Controller’s Office for guidance if questions arise related to making the payment or the eligibility of the subject to participate.
  4. Secure a completed copy of one of the following IRS forms when value of items exceeds $100 ($100 current VT de minimis value for tangible goods)
    1. W-9 (for US tax residents which include US citizens, permanent residents, and US “residents for tax purposes only”) from non-employees. This form must include the person’s social security number. (Employees do not need to complete a W-9 form.)
    2. W-8BEN form for all non-US tax residents.
    3. Foreign National Data Form – for all non-resident aliens
  5. Provide a letter to each participant explaining that any payments and/or gift cards and/or items exceeding $100 in value received is considered taxable to them.
    1. If the participant is a US tax resident, and payments are $600 or greater in any one calendar year, the university is required to file a 1099 form with the IRS. For amounts less than $600, the individual is responsible for reporting the additional income but the university does not file 1099 tax forms with the IRS.
    2. If the participant is a non-resident for tax purposes, the payment (or item) is likely taxable at a rate of 30% (withholding should occur at the time of payment). A Form 1042S will be issued and all payments reported to the IRS.
  6. Enter a payment request form in HokieMart ensuring the applicable Banner fund and account 14137. Attach the documentation in HokieMart. Include a memo that briefly describes the nature of the program, the time-period covered by the payments, and the amount of the payments.
  7. Attach a spreadsheet including, the amount of the payment, the participant names, addresses, Tech ID number as applicable, and W-9 or W-8BEN forms.
  8. Keep all disbursement records for a minimum of 7 years. The department copy of these disbursements must be kept to support tax reporting requirements and other legal matters.   

Loan of Personal Payment

Department responsibilities when the faculty member secures an Accounts Receivable loan from the Bursar’s Office or uses personal funds.

  1. The department should obtain approval from the Institutional Review Board (IRB). (Sponsored Programs procedures should be followed.)
  2. Select participants in accordance with this procedure.
  3. Contact the Controller’s Office for guidance if questions arise related to making the payment or the eligibility of the subject to participate.
  4. Secure a completed copy of one of the following IRS forms when value of items exceeds $100 ($100 current VT de minimis value for tangible goods)
    1. W-9 (for US tax residents which include US citizens, permanent residents, and US “residents for tax purposes only”) from non-employees. This form must include the person’s social security number. (Employees do not need to complete a W-9 form.)
    2. W-8BEN form for all non-US tax residents.
    3. Foreign National Data Form – for all non-resident aliens
  5. Faculty member secures a disbursement loan from the Bursar or uses personal funds.
  6. When participant information is not included in the required payment documentation due to confidentiality restrictions, the department must complete the Human Subject Confidentiality Certification Form.  A copy of the completed form must be kept on file in the department and submitted with the payment request.
  7. Faculty member makes disbursements and secures receipt documentation from the human subject participants.
  8. Provide a letter to each participant explaining that any payments and/or gift cards and/or items exceeding $100 in value received is considered taxable to them.
    1. If the participant is a US tax resident, and payments are $600 or greater in any one calendar year, the university is required to file a 1099 form with the IRS. For amounts less than $600, the individual is responsible for reporting the additional income but the university does not file 1099 tax forms with the IRS.
    2. If the participant is a non-resident for tax purposes, the payment (or item) is likely taxable at a rate of 30% (withholding should occur at the time of payment). A Form 1042S will be issued and all payments and withholdings reported to the IRS.
  9. Complete either a Chrome River Non-Travel Reimbursement Expense Report or a HokieMart ISR to ‘VT Bursar – AR Pymts’ as appropriate.
    1. Chrome River Non-Travel Reimbursement Expense Report: Completed when requesting reimbursement to a faculty member. Attach supporting documentation, including IRB approval, Human Subject Confidentiality Certification Form (if needed), proof of payment by the faculty member, and proof of receipt to the participant, to the report. Briefly outline in the description field the nature of the program, the time-period covered by the payments, and the amount of the payments.
    2. HokieMart ISR: Completed when requesting payment against an Accounts Receivable loan (petty cash) from the Bursar. Complete the ISR form in HokieMart using the ‘VT Bursar – AR Pymts’ vendor. Ensure the applicable Banner fund and account 14137 are used.  When confidentiality prohibits sharing of personal data, attach the Human Subject Confidentiality Certification Form to the HokieMart ISR.  Include a memo that briefly describes the nature of the program, the time-period covered by the payments, and the amount of the payments.
      1. The purchase requisition will be reviewed and approved by Accounts Payable, and sent to the Bursar for a journal entry to be processed to charge the grant and credit the faculty member’s disbursement loan.
    3. Attach supporting documentation to the HokieMart ISR, including IRB approval, Human Subject Confidentiality Certification Form (if needed), proof of payment by the faculty member, and proof of receipt to the participant.
    4. When total payments to an individual, including confidential participants, are $600 or greater during a calendar year, it is the department’s responsibility to provide summarized information to the Controller’s Office for 1099/1042S processing.  Information must include the participant’s name, address, W-9 / W-8BEN form, the Virginia Tech id number (if applicable) and the total amount paid to the participant in the calendar year.  For instructions on how to securely submit required information, please email acctpay@vt.edu.
    5. Keep all disbursement records for a minimum of 7 years. The department copy of these disbursements must be kept to support tax reporting requirements and other legal matters.

Controller's Office Responsibilities

  1. Review the payment documents for completeness, supporting documentation, including tax forms for individuals.
  2. Process the payment to the human subjects, repayment of the Accounts Receivable Loan, or reimbursement to the faculty member in accordance with the purchase order.
  3. Issue checks or direct deposits to the recipients.
  4. Apply the appropriate tax withholding when applicable.  Record and submit payment and tax information to the IRS via 1099/1042S forms when applicable.

This is a controlled document when viewed online. Printed copies are considered uncontrolled and may not reflect the most current version.