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Business Policy and Procedure Manual
University of Missouri-Columbia
A B C D E F G H I J K L M N O P Q R S T U V W X Y Z
March 1999
Chapter 1
GENERAL AND ADMINISTRATIVE INFORMATION
Section: 1:060
Contracts for Services

Contracts for Services

A contract is required for any services that the University obtains involving payment in excess of $500 (excluding travel expenses). A contract may not be necessary for those services involving payment of less than $500. Contracts with nonresident aliens (NRA's) are subject to specific IRS requirements and require special handling as described below.

Grants & Contracts

If payment is to be made from grant funds, the contract is processed by the Grants and Contracts Office (882-7560), 312 Jesse Hall. Questions involving the expenditure of grant funds, including the type of contract, and its processing, should be directed to the Grants and Contracts Office.

Contracts for Services

Division of Finance processes all service contracts or written agreements which do not involve grant funds. Questions about whether a contract or written agreement is necessary should be directed to Division of Finance (882-7243), 311 Jesse Hall

Approval Process

Deans, directors, and department chairs have established individual approval procedures for their units. Questions concerning the approval process for a specific unit should be referred to the designated fiscal officer of the college, division or department.

Preparing a Contract

Standard form contracts offer department representatives the opportunity to complete a contract by "filling in the blanks." If none of the standard form contracts are appropriate for the services being provided, contact Division of Finance (882-7254) for assistance.

Processing a Contract

  1. Two copies should be signed by the other party.
  2. Both copies of the signed contract are sent to Division of Finance, 311 Jesse Hall, for signature on behalf of the University.
  3. After the contract is signed on behalf of the University, one fully executed copy will be returned to the unit.

Payment for Services

Payment is initiated by sending a Voucher (UM 12) to MU Accounting Services, 325 Jesse Hall. For payments to NRA's see below.

Payment in Excess of $500

If the payment is in excess of $500 (excluding travel expenses), some type of support documentation is required:
  • Attach a copy of the contract to the voucher.
  • Or, type on the voucher "Contract on file in the Division of Finance" or (if applicable) "Contract on file in the Grants and Contracts Office."

Reimbursement for Travel Expenses

Travel expenses will be reimbursed in accordance with standard MU policies and procedures.

Contracts Involving Nonresident Aliens

  1. In order to make a payment to a NRA, submit the following documents to Accounting Services at least one week prior to the date the check is to be issued:
    1. Personnel Action Form For Individual Not Employed (UM376). The department should complete this form following the form instructions. Contact the Payroll Office if you have questions on how to complete this form. In the blank space at the bottom of Form UM376, indicate the purpose of payment and the amount to be paid.
    2. A completed IRS Form W-8-Certificate of Foreign Status.
    3. A completed IRS Form 8233- Exemption From Withholding on Compensation for Independent Personal Services of a Nonresident Alien Individual.
    4. A copy of the approved agreement or contract with the NRA.
      NOTE: If Division of Finance or Grants and Contracts Office have not yet approved, submit an unapproved copy.
    5. If the items listed in b., c. and d. are not yet available, indicate their status and expected completion date. The payment cannot be made until the W-8 and approved contract are received in Accounting Services. If the IRS From 8233 is not completed by the time payment is made, income tax will be withheld at 30 percent. If it is determined at a later date that the payment should have been withheld at a lower rate or exempt, the individual will need to file for a refund from the IRS.
  2. If the NRA's tax status has not been properly documented, IRS regulations require 30 percent withholding on all payments. To avoid withholding when it is not otherwise required, document the NRA's tax status on IRS Form 8233, which replaces UM 370. Proper documentation also requires that the NRA complete a W-8.
    1. The office of International Student and Scholar Services (OISSS) is responsible for making taxability determinations regarding NRA's. The NRA will need to visit the OISSS to complete the forms.
    2. The following information is needed for determining the tax rate or exempt status:
      • Nonresident alien's name.
      • Taxpayer identification number.
      • Permanent home address.
      • Country of legal residents.
      • Type of visa.
      • Immigration status.
      • Specific information regarding the reason for payment.
    3. Often an NRA is visiting the U.S. for a short period of time and has not obtained a taxpayer identification number. The NRA has two options:
      • Apply for a taxpayer identification number from the Philadelphia IRS Office before the trip; or
      • Apply for a taxpayer identification number up on arrival in the U.S. and provide MU Payroll Office with receipt of the application.
  3. Payments will be issued through the Payroll/Personnel Hand Drawn Check System. However, as noted above, all NRA contract payments must be submitted to Accounting Services for payment. Accounting Services will coordinate processing with the Payroll Office.