Background: The IRS requires income to reported annually in the calendar year payments are originally disbursed by withholding agents. Harvard must also comply with government regulations that require timely payments to be issued for services rendered, which is codified within Harvard Procurement and Payroll Policies.
Potential Tax Hazard- If Harvard has already issued an annual tax document (i.e., 1099 or 1042S) to a payee, a redeposit request to cancel a check can render a tax document incorrect, requiring Harvard to send the payee an amended form- which can also be problematic if a payee has already filed their annual returns.
Cancelling and redepositing checks from a prior calendar year for any foreign individual or foreign entity supplier requires prior review and approval by Nonresident Alien Compliance Manager, Natasha Rivera due to the potential tax reporting adjustments of any amounts previously reported.
Note: If you only need to submit a stop and reissue associated with the original payment request (PR/PO) and invoice (as opposed to a stop/ cancel and redeposit), a prior tax review is not required.
Important Reminders:
- Confirm accuracy of the supplier’s address and payment delivery needs prior to issuing payment. Many foreign countries no longer accept paper checks, where electronic payment might be necessary to avoid any payment delay.
- Schools and units should review the HART Cash Management – Escheat Due Diligence Report for any non-payroll checks that are still outstanding after 6 months and take action wherever necessary to make sure checks are cashed in a timely manner. See the HART Wiki for details on how to run the report.
- Review invoices details for any required payment delivery method (i.e., “must be processed by bank wire transfer”, etc.) prior to processing payment.
- Expect that international mail, especially now, remains unreliable in reaching many international locations.
- If the payee has a U.S. bank account, a Harvard issued check can be deposited into their account using their U.S. bank’s “mobile check deposit” service, even if they are not physically in the U.S.
- The payment method of a check cannot be changed on a stop & reissue (i.e., originally issued as a check and now need to pay by wire/ Zelle/ Paymode) when taxes were withheld from the payment.
- If a payment has not been cashed and, upon discussion with the supplier, the original payment should be reissued using the most updated “Check Inquiry Form”.