Royalty, Permission and User Fees

Definition

A payment made to an author, artist, composer or company for each copy of their work that is sold by the University or to an inventor for each article sold under a patent. Also included are payments for the right to use other intangible property such as copyrights, trademarks, and trade names. All royalty payments, totaling $10 or more in a calendar year must be reported to the IRS.

Intellectual Property/Software Royalties: When the software or property is used in the United States, this is considered to be U.S. source income subject to tax reporting and possible tax withholding. If the University of Chicago  receives the substantial rights to use the product or buys the software outright, this would be considered a purchase.

Payments to Employees

Employees will receive an IRS form 1099MISC from The University at calendar year end.

Required Payment Forms

  1. Submit through ePayment
  2. IRS Form W-9, Request For Taxpayer Identification Number

Payments to US Citizen, Permanent Resident Visitors and U.S. Entities

All royalty payments to individuals who are U.S. Citizens or Permanent Residents and U.S entities (companies) must also be reported to the Internal Revenue Service. US Citizens, Permanent Residents and U.S entities will receive an IRS form 1099MISC at calendar year end.

Required Payment Forms

Payments to US Citizens

  1. Submit through ePayment
  2. IRS Form W-9, Request For Taxpayer Identification Number

Payments to Permanent Residents

  1. Submit through ePayment
  2. IRS Form W-9, Request For Taxpayer Identification Number Payments to Aliens (Non-U.S. Citizens) and Foreign Entities Foreign individuals and entities (companies) will receive an IRS Form 1042S, Foreign Persons US Source Income Subject to Withholding. Thirty percent (30%) will be withheld unless the foreign individual or entity claims a lower rate of withholding per US tax treaty. The payee must have Social Security Number (SSN), Federal Employer Identification Number (FEIN) or Individual Tax Identification Number (ITIN) or 30% will automatically be withheld from each payment.
  3. Copy of Permanent Resident or Resident Alien card or copy of the I-551 Stamp that is printed on the applicant's passport

Payments to Aliens (Non-US Citizens) and Foreign Entities

Foreign individuals and entities (companies) will receive an IRS Form 1042S, Foreign Person's US Source Income Subject to Withholding. Thirty percent (30%) will be withheld unless the foreign individual or entity claims a lower rate of withholding per US tax treaty. The payee must have either a Social Security Number (SSN), Federal Employer Identification Number (FEIN) or Individual Tax Identification Number (ITIN) or thirty percent (30%) will automatically be withheld from each payment.

Required Payment Forms

  1. Submit through ePayment
  2. IRS Form W-8BEN (individuals), or Form W-8BEN-E (entities), Certificate of Foreign Status of Beneficial Owner for United States Withholding must be submitted if the individual or entity is claiming a tax treaty lower rate of withholding or exemption. Click here for country list.
  3. Form UPP 192, Alien Determination of Residency Form