Paying Persons for Services Rendered
All payments to individuals for services rendered, regardless of dollar amount, must be made either through Payroll (payments to employees, including students) or Accounts Payable (payments to non-employees). The IRS regards all payments for services to be taxable income and therefore requires such payments to be made through official channels so that appropriate reporting of tax liability may be made. There are no exceptions to this rule.
We are seeing an increase in the number of faculty members who are directly paying students or other individuals for services, especially for assistance with research. This is prohibited by law and will not be reimbursed by the College, regardless of the funding source. In each case where this has happened this year (four so far) we have had to remove that item from the expense report and instruct the requesting department to then process the payment through the appropriate channel (and further advise all parties that the recipient should reimburse the faculty member). Please note, participation as a "human subject" in a college-funded study does not constitute rendering of a service and these situations (albeit rare at Vassar) are generally exempt from this requirement if a small participant fee is paid.
Please contact Accounting Services with any questions on this matter and thank you in advance for your cooperation.