Suggested procedures for Determining a Departmental policy to Allocate Funds for the provision of professional Services
Over time questions have been raised about when it might be appropriate to the circumstances under which the a department can make a payment to a faculty member’s discretionary account for some professional services he or she has rendered and not have it be considered income to the faculty member.
Under the IRS rulings, the major considerations are that the faculty member has no control over the assignment of funds to her/his account, nor control over the amount. However, the faculty member may be asked, prior to commencement of services, his preference regarding how the monies should be paid (e.g. compensation, discretionary account, etc.) The department head/administrator may consider this information, but then in his sole discretion makes the decision how to allocate the amounts.
It is suggested that each department, school or college develop a policy and procedures for administration of this type of event.
policy and procedure should be developed with the following in mind:
- Written language that expressly states that the individual research account of a faculty member is limited to further and/or benefit the mission of the University, and is not for the personal gain of the faculty member.
- The purpose of the account is to provide expense reimbursement for research projects and assignments. The account is subject to University and Industry guidelines that ensure appropriate use of the account.
- The faculty member is not entitled to any account funds upon severed employment with the University.
- The department should determine the amount of funds available for the provision of any specific professional service in accordance with the department’s goals, mission statements and submitted operating budgets.
- Information or input should be solicited from an individual faculty member on the amount of funds to allocate to his/her research account from the department for a specific provision of professional services in accordance with the written policy noted above.
If you have further questions, please contact Academic Human Resources (763-8938) or the Corporate Tax Manager’s Office (763-3282).
Academic Human Resources