Human Subject Payments

Policy Statement

This policy establishes the tax reporting requirements and data-security protocols related to the payment of human subjects at Harvard. Individuals conducting Harvard research studies that compensate human subjects must collect and document all personal information necessary to comply with IRS tax-reporting regulations. High-risk confidential information must only be collected when necessary per this policy; any confidential information collected must be protected in accordance with the University’s Enterprise Information Security Policy.

Reason for Policy

Harvard must satisfy certain IRS reporting obligations when making compensation payments to human subjects. The personal information Harvard collects in order to comply with IRS regulations is confidential, and Harvard has an obligation to protect it.

The policy also exists to reduce administrative burdens, and limit the exposure of high-risk data, by setting a reasonable dollar threshold that determines when Principal Investigators (PIs)/researchers must collect confidential information in certain situations.

Who Must Comply

All Harvard University schools, tubs, local units, Affiliate Institutions, Allied Institutions and University-wide Initiatives must comply.

Procedures (see links in Forms and Other Resources section)

  1. Understand basic IRS rules for human subject payments. The IRS treats human subject payments, whether cash, check, gift card or in-kind items (books, DVDs, etc.) as taxable income to the recipient. This means the recipient is supposed to report the payment when he or she files a personal tax return at the end of the year. As the payor, Harvard must follow IRS regulations. The tax treatment of human subject payments depends on the amount paid, the recipient’s tax status, and whether the study takes place inside or outside the U.S.

    1. Reporting: if the University pays $600 or more to a US tax resident during the calendar year, then the University is required to report the payments to the IRS and issue the recipient a Form 1099. Payments to foreign nationals are reported on a Form 1042-S. Where reporting is required, Harvard must collect the recipient’s full legal name, SSN/ITIN (or HUID), permanent address, mailing address (if different), and Foreign National Information Form (FNIF; for foreign nationals).

    2. Employment Authorization for foreign nationals: foreign nationals may receive human subject payments in the U.S. only after obtaining authorization from their sponsoring agencies to receive compensation from Harvard University. Note that a Harvard-sponsored visa does NOT NECESSARILY include authorization to receive compensation from Harvard. If a foreign national does not have and cannot obtain authorization from his or her sponsoring agency to receive compensation from Harvard, the foreign national cannot be paid for participating in the study.

  2. Pay subjects according to tax reporting requirements. Generally, payments of $100 or less can be made by cash or gift card and do not require collection of a participant’s SSN/ITIN (see exception in 5a); while payments over $100 must be made by check. Requirements are summarized below; see Appendix A for decision tree.

    1. Scenario A: $100 or less paid to any participant (includes HU employees, see 5b for more information)
      1. Can be paid by cash, bank gift card, other gift card, or in-kind items like books or DVDs; collect participant’s full legal name only
      2. Complete Subject Payment Form – Section I only. See Appendix B.

    2. Scenario B: Over $100 paid to a U.S. tax resident 
      1. Must be paid by Accounts Payable check; collect full legal name, SSN/ITIN (or HUID), permanent address and mailing address (if different)
      2. Recipient will need to be set up as a vendor in Oracle, if not already set up.
      3. Complete Subject Payment Form – Section II only. See Appendix B.

    3. Scenario C: Over $100 paid to a foreign national inside the U.S. 
      1. Must be paid by Accounts Payable check; collect full legal name, SSN/ITIN (or HUID), permanent address, mailing address (if different) and FNIF
      2. Recipient will need to be set up as a vendor in Oracle, if not already set up.
      3. Complete Subject Payment Form – Section II only. See Appendix B.

    4. Scenario D: Over $100 paid to a foreign national outside the U.S.
      1. Can be paid by cash, bank gift card, other gift card, or in-kind items like books or DVDs; collect participant’s full legal name AND location statement (See Subject Payment Form, Section III).
      2. Complete Subject Payment Form – Section III only. See Appendix B.

    5. Note that payments of any amount can always be made by Accounts Payable check, if desired. 
      1. Collect full legal name, SSN/ITIN (or HUID), permanent address and mailing address (if different) and FNIF (if foreign national)
      2. Recipient will need to be set up as a vendor in Oracle, if not already set up.
      3. Complete Subject Payment Form – Section II only. See Appendix B.

  3. Use an appropriate payment mechanism
    1. Cash payments can be made from STOAs or petty cash accounts, depending on local policy.
    2. Check payments must be made via central Accounts Payable.
    3. Gift cards and in kind items (books, DVDs) can be purchased via HCOM.
    4. Use of the Corporate Card or personal funds with reimbursement is strongly discouraged.

  4. Preserve confidentiality. Harvard must protect confidential information at all times, including during collection, payment processing, and storage. See the University’s Enterprise Information Security Policy for more information. Omit confidential information from Payment Requests: finance offices must not submit confidential information with Payment Request supporting documentation to University Financial Services. When submitting Payment Requests, preparers must include only the following statement in the business-purpose field: “Confidential study [date]; the department securely maintains study data.”

  5. Charge the proper object code. When processing human subject payments, use the correct general ledger object code, 8273 “Subject Payments^Other Svcs.”

  6. Apply exceptions for special situations. Certain types of human subject payments have special rules and are treated differently than described above.

    1. Aggregate subject payments of $600 or more: to satisfy Harvard’s Form 1099 reporting obligations, if a PI/researcher reasonably expects that aggregate payments to an individual will exceed $600 in a calendar year (for example, when the participant is expected to receive fifteen separate $50 gift cards over the course of a year-long study), the PI/researcher or designee must follow the steps in Scenario B above (for U.S. citizens, permanent residents and non-resident aliens) or Scenario C above (for foreign nationals) and must collect an SSN or ITIN.

    2. Payments over $100 to Harvard employees: 
      1. It is generally assumed that any Harvard employee participating in a human subject study will perform services that are substantially unrelated to his or her regular Harvard job. In such cases, human subject payments to Harvard employees must be processed as Payment Requests (rather than as Web Reimbursements). 
      2. In the unusual situation that the services a Harvard employee performs are in fact substantially similar to his or her regular Harvard job, the human subject payment must be paid as additional pay through the University’s payroll system; contact your local payroll office for more information.

    3. Reimbursements for actual travel expenses (e.g., parking, mileage, or tolls) to human subjects are not considered compensation by the University or the IRS and can be processed on a Non-Employee Reimbursement.

    4. Payment/reimbursements to parents of minor (under 18 years old) subjects can be made directly to the parent of the minor.

    5. Research integrity exception: cash payments over $100 to human subjects are prohibited in most cases. However, if in rare circumstances an academic unit can demonstrate that the integrity of its research will be affected in a material, negative way unless compensation is made in cash over $100, that unit may receive an exemption from the payment process of this policy with approval from the relevant tub financial dean or equivalent. A unit that receives such an exemption from the normal payment process of this policy is responsible for tracking all calendar-year cash payments over $100, for collecting appropriate participant information (including name, address, and SSN or ITIN), and for forwarding this information to University Financial Services in the Office of the Controller in January of the subsequent calendar year.

  7. Maintain required documentation. In the event of an IRS or sponsored programs audit, it will be the joint responsibility of the PI/researcher and the related local finance office to supply all required supporting documentation for human subject payments made from the PI/researcher’s accounts. PIs/researchers must securely maintain confidential study data needed to support payments to recipients. Central Administration retains supporting documentation in accordance with the University’s records retention policy. Grant terms dictate sponsored research retention requirements, which may be longer.

Responsibilities and Contacts

Financial deans or equivalent tub financial officers and research administrative offices (or their equivalents) are responsible for ensuring that local units abide by this policy and the accompanying procedures. Tub finance and research administrative offices are responsible for implementing policy and procedures, principally by ensuring that payments to human subjects are made in accordance with IRS regulations, and that related confidential information is secure, per this policy.

Principal Investigators (PIs)/researchers are responsible for abiding by this policy and its accompanying procedures. In the event of an IRS audit, it will be the joint responsibility of the PI/researcher and the related local finance office to supply all required supporting documentation for human subject payments made from the PI/researcher’s accounts.

Local Finance Offices involved in processing human subject payments are responsible for abiding by this policy and its accompanying procedures. In the event of an IRS audit, it will be the joint responsibility of the local finance office and the related PI/researcher to supply all required supporting documentation for human subject payments made from the PI/researcher’s accounts.

University Financial Services (UFS), within the Office of the Controller, is responsible for maintaining this policy and for implementing and supporting the operational procedures defined by this policy. Specifically, UFS is responsible for communicating this policy to tub financial deans. The Customer Relations Teams within UFS are responsible for assisting with policy-related questions and for providing human subject payment related training to tub and department administrators. Contact: 617-495-8500

Definitions

High-risk confidential information: includes a person's name in conjunction with the person's Social Security, credit or debit card, individual financial account, driver's license, state ID, or passport number, or a name in conjunction with biometric information or personally identifiable medical information about the named individual. Refer to the full Enterprise Security Policy for details.

Human subject: A volunteer participant in a research study. Any person participating in a research study is known as a human subject (participant). Under the federal regulations, human subjects are defined as: living individual(s) about whom an investigator conducting research obtains: 1) data through intervention or interaction with the individual or 2) identifiable private information.

Individual Taxpayer Identification Number (ITIN): A tax processing number issued by the IRS. It is a nine-digit number that always begins with the number 9. IRS issues ITINs to individuals who are required to have a U.S. taxpayer identification number but who do not have, and are not eligible to obtain, a Social Security Number. ITINs are issued regardless of immigration status because both resident and nonresident aliens may have U.S. tax return and payment responsibilities under the Internal Revenue Code.

Foreign National Information Form (FNIF): A form completed by foreign nationals and ultimately submitted to University Financial Services. The FNIF collects visa and other information to allow UFS employees to determine the subject’s tax status.

Foreign national: An individual who is a citizen of any country other than the United States. These individuals are treated differently for tax purposes than U.S. tax residents.

Location statement: A statement signed by a human subject or PI/Researcher or designee verifying the country in which the subject participated in a research study. A sample of a Location Statement appears in Section III of the attached Subject Payment Form – see Appendix B.

Principal Investigator (PI)/Researcher: For the purposes of this policy, the person in charge of conducting a research study with human subjects as participants.

U.S. Tax Resident: a person who is subject to U.S. tax reporting rules. U.S. tax residents include:

  • U.S. citizens
  • Permanent residents: persons who are allowed to reside indefinitely within a country of which they are not citizens. For tax purposes, permanent residents are subjected to the same rules that apply to U.S. citizens and are taxed on their worldwide income.
  • Resident aliens for U.S tax purposes: Defined by the IRS as foreign nationals who satisfy the substantial presence test. These individuals are taxed under the same rules that apply to U.S. citizens and are taxed on their worldwide income.

Visa: An official government document that gives someone permission to travel into a specific country and stay there for a set period of time.


Revision History

6/30/2011: updated format and simplified procedures, added Appendices

Appendices

Appendix AStandard Human Subject Payments Policy Decision Tree
Appendix BSubject Payment Form (includes Location Statement in Section III)

See also: Policy, Payment, Tax