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Procedure: 4-80

Effective: August 8, 2000

Owner: Student Financial Services

Latest Revision: June 1, 2002

Completing Fellowship Disclosure Form

Procedure Steps

Scope | System References | Policy | Responsibility | Distribution | Ownership

Scope

This procedure describes the process of completing the Fellowship Disclosure Form. This form only needs to be completed for payments made as fellowships through ISIS for amounts in excess of tuition and fees. This disclosure form will need to be completed for postdoctoral fellows receiving fellowships, as well as enrolled students by the individual responsible for approving the fellowship. The form will be retained in the department and should be completed for each academic year the individual receives a fellowship payment.

Background

The Internal Revenue Service (IRS) is now extensively auditing universities, and in some cases has assessed significant penalties to institutions that are not in compliance with IRS regulations. One area that the IRS is reviewing very carefully is the treatment of fellowship payments. According to IRS guidelines, true fellowships cannot be granted on the condition of receiving services. If the fellowship is granted on such a condition, for example the teaching of a course, then the individual is really an employee and payment must be made through the payroll system and is subject to appropriate taxes and withholdings.

In response to these IRS reviews, we have developed a fellowship disclosure form that will serve two purposes. First, it contains four questions that are indicative of whether or not the fellowship is a true fellowship according to IRS guidelines. This should assist you and your staff in determining the appropriate payment method to be used. Second, the form will document to the IRS that the department has reviewed the payment to ensure it meets the test of a true fellowship.

System References [Top]

See the Fellowship Disclosure Form/Questionnaire.

To view IRS Regulations concerning Scholarship/Fellowships see Topic 421 - Scholarship and Fellowship Grants on the Internal Revenue Service Web site.

Policy [Top]

See University Policy IV.G.2 --"Taxation Instructions for Foreign National Recipients of Scholarship/ Fellowships."

See University Policy VI.F.4 -- "Use of the Payment Voucher and Demand Payments."

Responsibility [Top]

Prior to authorizing payments to a fellowship recipient, over and above amounts for tuition and fees that are not paid through Payroll, the department or school must complete this form for the recipient. The University regards the payment of a fellowship stipend as proof that the department has complied with this requirement.

This form should be completed each time a recipient receives a new fellowship, and should be retained in the department for a period of five years. The department or school may be liable for any penalties resulting from an Internal Revenue Service (IRS) audit, if it has not complied with this procedure.

Distribution [Top]

All departments that authorize payments to a fellowship recipient.

Ownership [Top]

The Director of Student Financial Services is responsible for ensuring that this procedure is necessary, reflects actual practice, and supports University policy.

Procedure Steps [Top]

The Fellowship Disclosure Form/Questionnaire contains the detailed instructions for completing the form.

End of Activity


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