The Accounts Payable department is open: 9:00 a.m. to 4:00 p.m. Monday through Friday. The Accounts Payable Department is responsible for paying vendors and for reimbursement and advances to faculty, staff and students.
There are reasons behind the requirements for authorization and documentation in this area. The College has an obvious responsibility to ensure that payments to vendors and reimbursements to employees are legitimate business expenses of Carroll College and within the scope of each budget's spending limits. The IRS is interested in payments that may need to be included in an employee's taxable income and in these cases; there is a possible liability to both the College and the employee. The documentation required to process any payment is designed to contribute to institutional control of spending as well as protect the College and the employee from potential tax issues.
Checks are processed by Accounts Payable once a week. Check Requests received by 4:00 p.m. on Monday are available on Friday after 2:00 p.m.
There are several types of payments that can run through accounts payable. The most common are invoices. Other types include registration fees, personal reimbursements, travel advances/reimbursements, subscription renewals, personal service contracts, performances, honorariums and refunds
The Accounts Payable Staff in the Business Office processes all payments to independent contractors. Independent Contractors are vendors who perform services for the college but are not employees of the college. They include many occupations where the worker is considered self-employed.
The Internal Revenue Service (IRS) regulates the method of payment for services rendered by employees and non-employees. Non-compliance with these regulations can result in significant monetary penalties.
The compensation paid to the independent contractor is taxable. Accounts Payable does not withhold taxes from the payments. The income is reported to the recipient and to the IRS at the end of each tax year on Form 1099.
For this reason, it is very important that the payments to the independent contractors are made by Accounts Payable. Please do not pay anyone who has performed a service with cash or personal check. By doing so you would place the college in violation of the Internal Revenue Code and our ability to reimburse you is at risk.
Following are some factors that on a cumulative basis would point towards an employee classification or relationship:
Questions? Contact Lori Peterson (447-5432) or Kari Brustkern (447-5422) for help with this determination.
An employee is an individual who performs a service for the College and is working under the direction and control of the College or its employees. Direction and control can be implied to exist when the employer has the right to control both the results as well as the means and methods of the worker. (IRS Treasury Regulation 31.3121(d)-1(c)).
An independent contractor is an individual engaged by the College to perform a specific function or task and who is free to perform this function or task completely at the individual's own discretion with regard to means and methods. No taxes are required to be withheld or paid on compensation disbursed. (IRS Treasury Regulation 31.3401(c)-1(b). The existence of an agreement or contract helps support the independent contractor position. This document should be fairly specific in what is to be provided and amount or lack of control the College has over the individual.
Specific factors that are used by the IRS in determining whether an individual is an employee or an independent contractor are listed below. This listing is commonly referred to as the "20 factors" test.
Note: "Yes" answers are indicative of employee status per IRS Revenue Ruling 87-41, 1987-1 CB 296.
While there is no set number of "yes" answers which cause a person to become an employee rather than an independent contractor, some IRS auditors will try to classify an individual to employee status with only one yes. If you have more than a few "yes" answers, extreme caution should be taken if independent contractor status is going to be claimed.
If the IRS reclassifies a significant number of independent contractors to employee status, the result is a substantial financial impact on the College and the departments that are making these payments. In situations where intentional violations of employment tax rules and regulations are detected (i.e., changing a long-standing employee to an independent contractor in order to "save" payroll taxes and benefit costs), the IRS will assess taxes as follows:
In some cases, the IRS can levy penalties and interest charges. Even if the taxes have already been paid by the individuals in question, the IRS will still make the tax assessment against the College. It then becomes the responsibility of the College to obtain repayment from the individuals in question (assuming the College paid the tax assessment).
Additionally, reclassification to employee status may require that the employee be included in pension plans and other fringe benefit programs. The pension plan could be subject to penalty violations or even disqualification.
Listed below are payments to individuals (including partnerships and certain corporations), which are subject to reporting to the IRS as miscellaneous income. The following list includes only those types of payments and examples, which are typical to the College's environment. This list is not exhaustive and does not state all conditions to which some payments are subject.
1) Rents of real estate such as office space and machines
2) Gross royalty payments
3) Prizes and awards to the employees or non-employee that are not for services rendered, and to non-employees for services rendered.
4) Non-employee compensation; examples include:
In order to comply with these IRS reporting requirements, an IRS Form W-9 must be obtained from the payees and the social security number or employer identification number must be shown on the invoice.
1) Business Functions
When requesting reimbursement for business expenses, such as business lunches or entertainment, provide original receipts as supporting documentation. The "Purpose of Expenditure" section of the Request for payment or the "Travel Purpose/Nature of Entertainment" section of the travel expense form must contain a precise explanation of the activity, and its purpose. The explanation should establish that the activity was being held in the interest of the College and include the names and affiliations of persons present. General phrases such as "Entertainment Expense" and "Business Lunch" are not adequate explanations.
If circumstances are such that receipts cannot be obtained (i.e. the sharing of the cost for a business meal by participants), a memo or notation regarding this circumstance must be provided by the employee and approved by the supervisor indicating that the non-receipted expenditures were reviewed for reasonableness and authorized. This does not include lost receipts being categorized as receipts not obtainable.
The Vice President of the department making the donation must approve donations from College funds to charitable or other organizations outside the College or to other departments within the College. Written approval should be obtained prior to making the donation and should accompany the Request for Payment-Expense Vendor Request or Journal Voucher. These donations must be made in the name of the College.
Donations to organizations outside Carroll College should be processed on a Request for Payment form. Donations to organizations or departments within Carroll College must be processed on a Journal Voucher and sent to the Controller.
Donations made in the name of an individual employee are not payable or reimbursable as a Carroll College business expenses.
No gifts may be purchased using any type of College funds, to include operating funds, designated funds, restricted funds, agency funds, and so forth, unless the Vice President of the department has approved them in writing.
4) Out-of-Pocket Expenses
When requesting a reimbursement for expenditures not paid for from petty cash (which is limited to $50 and emergencies) attach original receipts for authorized out-of-pocket expenses on a Request for Payment form. Purchases of services or equipment should never be made out-of-pocket nor should out-of-pocket purchases be made in lieu of using the Purchase Requisition process.
Daily parking of personal vehicles by employees at the place of employment (on or off-campus) is considered a personal expense and is not reimbursable. This does not include parking incurred while traveling on College business.
6) Parking and Traffic Violations
Parking tickets and similar fines or penalties levied against an employee while conducting College business in a College-owned and marked vehicle (i.e. a maintenance truck or bus) are reimbursed only if a written explanation is provided which substantiates that the occurrence of the fine or penalty was unavoidable. The employee's Vice-President must approve this statement. It is recommended that tickets and fines be paid directly by the employee to avoid further penalties and interest. Reimbursements are requested on Request for Payment Forms and are subject to the approval of the Controller. Tickets for traffic violations (other than parking) levied against an employee while using either a College or personal vehicle are not reimbursable.
Travel and other expenses paid to job applicants must be fully explained and approved by the Director of Human Resources. Carroll's policies regarding travel reimbursement apply (see the Travel chapter).
Students will receive a refund check when they have a credit balance on their student accounts, unless they have requested in writing that the credit balance be left on their account for the academic year.
Other refund requests must be accompanied by evidence that the original payment was made with documentation to support the refund. Such supporting documentation might include the validated cash receipts, roster of attendees and/or a policy on refunds.
9) Registration Fees for Conferences and Seminars
The department head must authorize prepayment of fees for conferences, seminars or workshops. Employees requesting payment of registration fees to attend meetings not sponsored by the College should complete a Request for Payment stating the purpose of the payment request and the date by which it is need, and attach a copy of the registration form along with the original registration form to be mailed as supporting documentation.
10) Relocation Expense
Expenses for moving or relocating an employee must be supported by a copy of the relocation agreement signed by the department head and the Director of Human Resources in addition to original receipts. The moving expenses may be requested by Purchase Requisition or reimbursed to the employee on a Request for Payment Form. The travel expenses must be itemized on a Travel Expense Report and are subject to Carroll's policies regarding travel reimbursement (see also Travel Chapter). Account code 20016 Employee Moving Expense must be used to record these expenditures and approved by the Director of Human Resources.
Relocation expenses paid by the College must be reported on the employee's IRS FormW-2 in accordance with IRS regulations. Therefore, the social security number must be provided on the Purchase Requisition, Request for Payment or Travel Expense form.
11) Tickets to Events
The payment or reimbursement request for tickets to sporting and other events purchased with College funds must be accompanied by a written explanation. The memorandum or letter must include a business related purpose (i.e. entertainment or recruiting) and must be approved by the Vice President of the area.
Payments for tickets purchased from organizations outside of Carroll should be submitted on a Request for Payment Form payable to the outside organization. An approved memorandum or letter of authorization, an order form or other supporting documentation must accompany the Request for Payment.
Payments for tickets purchased from Carroll must be processed on an Inter-Office Memorandum and accompanied by the above-specified documents.
The IRS Code provides that no deduction will be allowed for entertainment expenses unless the employer can substantiate each element of the expenditure. Therefore, the department is responsible for documenting the following information every time a ticket or set of tickets is used:
- Amount: the cost of the tickets or the pro-rated share of the total season ticket cost,
- Time: the date of the event,
- Place: the location of the event,
- Business Purpose: Business reason for the entertainment or nature of business benefit derived or expected to be derived as a result of the entertainment and the nature of any business discussion or activity, and
- Business Relationship: occupation or other information relating to the person or persons entertained (including name, title or other designation) sufficient to establish business relationship to the taxpayer.
Regular use by employees for non-business purposes can result in taxable income to the employee. However, the provision of occasional sporting event tickets to an employee for personal use will not result in taxable income. It is the department's responsibility to ensure that the same employees do not regularly use the department tickets for non-business purposes.
How to complete the request for payments:
1. Current Date: If a completed Request for Payment is received in the Business Office by Monday at 4:00 p.m. then a check will be ready after 2:00 p.m. Friday. Allow additional time for transmittal of your check by U.S. mail or campus mail.
2. Payee Information: Enter full name and complete address.
3. Account Number: Enter valid account number to charge Fund, Department, Expense and Object Number. Please use the account code that best describes the expenditure not where you have available funds. If you need to move budgets, please complete the Budget Adjustment form before making expenditure.
4. Project Code: Appropriate project codes must be entered if expenditure is for a specific project.
5. Amount: Enter the amount charged to each account/center combination.
6. Total: Add the total to be paid on the request.
7. Purpose of Expenditure: Briefly describe the purpose of the check with a precise explanation. Remember that expenditures over $250.00 must be processed through the Purchase Order System
8. Attachments to Accompany Checks: Be sure to include a copy and the original of any attachments that need to be sent with the check. For example registrations and subscription orders.
9. Documentation: Original invoices and/or other supporting documentation must be attached in order for a check to be issued.
10. W-9: W-9's must accompany first request for payment for all entities providing services.
11. Contractors Approval Letter: A copy of the contractor's approval letter from the State of Montana must accompany all first Requests for Payment Forms every year for contractors. (See Independent Contractors Section.)
12. Distribution: Please circle the appropriate distribution required.
13. Requester: Legibly print name.
14. Department Head: Person responsible for budget must sign.
15. Approval Signature: Must be signed by Controller or Assistant Controller before being processed for payment.
16. Form Use: Do not use this form if you already filled out Purchase Order, Travel Reimbursements or used a Carroll College Corporate Credit Card.
To Initiate a Purchase Order Manually
The steps to initiate a Purchase Order if you do not have computer access are a follows:
1) Complete a Purchase Requisition with approvals and retain a copy for your records.
2) Send the completed, legible Purchase Requisition to the Business Office.
3) The Purchase Requisition information will be entered into the computer and a Purchase Order will be generated provided your budget is not exhausted.
4) The Business Office will send you a copy of the Purchase Order. The Purchase Order will be assigned a number that should be referred to in conducting business.
5) If requested, the Business Office will fax a copy of the Purchase Order to the Vendor.
6) If you request the Purchase Order to be FAXED to a Vendor, please provide the FAX number so that the Business Office can fax the PO to the vendor.
7) The Business Office will retain two copies of the Purchase Order for record keeping purposes. One copy will be filed by number for control purposes and the other copy will be filed alphabetically by vendor with the purchase requisition attached.
8) Allow at least three working days for processing purchase requisitions. However, no requisitions will be processed during fee payment weeks of each Semester.
To Initiate a Purchase Order Through the Computer
1) You must have computer access to initiate a Purchase Requisition directly.
2) You must have authority to request a Purchase Requisition directly.
3) Enter information in computer and notify Business Office when completed.
4) Business Office will process Purchase Order within forty-eight (48) hours after being notified.
How to Complete a Purchase Requisition
1. Request Date: Enter date
2. Requester ID#: Enter your Carroll ID number that can be found on your Payroll check stub.
3. Vendor: List the preferred Vendor and Vendor's complete address.
4. Date to Order: List date you need order to be sent to vendor.
5. Requester Name: Enter your name (please print).
6. Delivery Date: Enter the date you want the items delivered.
7. Ship to Department: Indicate where you want item shipped
8. Item, Quantity, Description, Cost per Item and Total: Type or print each item, quantity, description including item number if required by vendor, cost per item and total. Also total all items at the bottom. If not legible, Purchase Requisition will be returned to requester.
9. Charge Account: List account you want charged. If more than one account is charged, you need to segregate by item. The computer will not allow you to allocate accounts by total expenditures.
10. Budget Funds Available: If you do not know if funds are available, you need to find out before submitting form for processing.
11. How to Send Purchase Order to Vendor: Indicate how you want Purchase Order sent by checking one of the items listed.
12. Department Head Approval: Department Head must sign before sending to Business Office.
13. Date: Department Head needs to date when signed.
Lead Times and Vendors
1) Place requisitions fifteen days (15) in advance of the date by which you require the items.
2) Allow twenty days (20) for delivery for out-of-town purchases.
3) Allow six (6) to eight (8) weeks delivery time when ordering equipment and furniture.
Confirming the Delivery of Goods
You must notify the Accounts Payable Department when you receive the goods you have ordered or the invoice will not be paid. To do this, either send an e-mail or a copy of the Purchase Order to the Accounts Payable Department. The Accounts Payable Department sends out copies of the invoice received which can also be returned with an approval to pay and a signature. Please help the Accounts Payable Department by responding timely.
For partial deliveries indicate the items received, and sign and date the copy of the invoices or the purchase order. Note: Do not confuse a packing slip with an invoice - both display the P.O. number assigned by the Purchasing Department.
Accepting Quantities Different From Those Ordered
Carroll's policy is to report all overages, shortages, and incorrect deliveries to vendors promptly. If you accept quantities different from those that you have ordered, note the changes on the Purchase Order and send it to the Accounts Payable Department.
A stop payment is a request by the College to a financial institution (bank) to not process a check upon presentation. The most frequent reasons for stop payments are a lost, stolen, or damaged check. A request is made to reissue the original check. A stop payment is made to prevent two checks being presented from payment for the same thing.
A department/individual may initiate a stop payment by contacting the Business Office. Notify the Business Office in writing when it is first determined that a check is lost. Send a memorandum containing check number, name and address of the payee, amount of check, and date check was written, if known. A new check request must be submitted if a replacement check is to be issued. Copies of the original payment request and supporting documentation should be attached to the new request with an indication on the form that the request is for a replacement check.
A stop payment on a Carroll College check may only be requested by the Business Office. The Controller or Assistant Controller will contact the bank after checking the outstanding check list. After the "Stop Payment" confirmation is received, a new check will be reissued through Accounts Payable and may take up to two weeks for processing time. A $30 processing fee will be charged to the department or individual.
If the original check is found after the stop payment action has been requested, it must be marked "VOID" across the face and returned to Accounts Payable with memorandum stating that a stop payment had been requested and a replacement check issued.
A replacement check can be issued if the original check was lost, stolen, destroyed, stale dated, etc.
The following instructions should be followed to request a check to be reissued:
If a check contains incorrect information and a replacement check is desired, the original check must be marked "VOID" across the front, and returned to the Accounts Payable Department with a new check request. Copies of the original payment request and supporting documentation should be attached to the new request with an indication on the form that the request is for a replacement check.