The Tax Services website is provided as a one-stop resource of tax information that is pertinent to university operations. The website is developed and maintained by the Financial Services department within Administration & Finance. Tax Services' mission is to encourage and facilitate campus-wide tax compliance. Tax Services' staff are here to assist departments with their tax questions and provide one-on-one and small group training sessions as needed. Please feel free to contact us with any questions you may have.
As prescribed by the Integrated CSU Administrative Manual (ICSUAM) policy number 3801.01, the Chief Financial Officer of Cal Poly has delegated responsibility to Financial Services to ensure the following:
- Advise internal departments such as Contracts, Procurement and Risk Management, Accounts Payable and Payroll on tax implications
- Advise campus personnel and affiliates of the university to resolve tax issues that are specific to their particular needs
- Provide Auxiliaries on campus (CPF &CPC) with the information required to file their 990 tax return
- Ensure that taxes are appropriately withheld and remitted
- Work directly with vendors to structure transactions in a manner that minimizes any taxes
- Assist student groups with university tax identification information for entities making tax-deductible donations on their behalf
- Oversee all Non-Resident Alien Taxation issues for independent contractors and employees providing services to the university
- File tax returns on behalf of the university
- File necessary documentation to maintain tax exemptions
For helpful information on tax issues please see the frequently asked questions below. For Unrelated Business Income Tax (UBIT) issues please contact Dee Louie, Assistant Director in University Accounting & Reporting and Financial Reporting at 805-756-5961 or firstname.lastname@example.org. For all other tax-related questions please contact the Tax Coordinator Marc Benadiba, University Controller, at 805-756-5864 or at email@example.com.
Frequently Asked Tax Questions
University Tax Status Questions
What is the tax status of the university?
California Polytechnic State University, San Luis Obispo (Cal Poly) as part of the California State University System (CSU), is an agency of the State of California (reference the California State Education Code Section 66600 et al) and, as such, is exempt from Federal Income taxes in a manner similar to IRC 501(C) Not-for-Profit organizations. The specific section of the law that provides the exemption is Title 26 United States Code, Section 115, which states, in part:
Gross income does not include…income derived from any public utility or the exercise of any essential governmental function and accruing a State or political subdivision thereof…
Cal Poly and the CSU operate similar to Not-For-Profit organizations, offering the same services as non-state 501(c) universities. However, State appropriations are the primary funding source for Cal Poly and the CSU. The IRS issues determination letters solely to qualified 501(c) corporations. Thus, since Cal Poly is an agency of the State of California and is exempt under section 115 of the Internal Revenue Code, we are not required nor are we able to obtain an IRS determination letter. Payments made to Cal Poly are not included in gross income for taxable purposes, as stated in the Internal Revenue Code and shown above.
Cal Poly's federal taxpayer identification number is 77-0209717.
Fringe Benefits Questions
My department is sponsoring a visiting scholar with food, transportation, and lodging. Is there a tax liability, and if so, who is responsible for this tax liability?
Food, lodging, and transportation provided for the scholar at no cost to him/her may result in a tax liability for the scholar. The university is required to treat these types of expenses as taxable transactions and report accordingly. In order to avoid tax liability, the scholar should incur the expenses on his/her own and submit a reimbursement request. Reimbursements for these types of expenses are generally not treated as taxable if supported by appropriate receipts.
I am a new faculty member and have been granted a moving and relocation allowance as part of my employment package. Is any part of my moving and relocation allowance taxable?
Yes. All moving and relocation reimbursements are subject to Social Security, Medicare, and Federal tax withholding. California State withholding only applies to “Non-qualified moving expenses”.
"Non-qualified moving expenses" are those costs that do not meet the Internal Revenue Service's definition of qualified expenses and are considered reportable and taxable income. The following moving and relocation expenses incurred will be considered reportable and taxable income:
- Meals connected with the move
- Pre-move house hunting trips
- Temporary living expenses
- Sales or purchase of a residence
- Leases, unexpired or new
- Storage more than 30 days after moving into residence
- Mileage reimbursement in excess of the federal moving expense mileage rate
- Moving expenses that do not meet the time or distance tests
Mileage, Meals and Travel Transactions Questions
Are there any circumstances in which an employee receiving a meal allowance is subject to tax?
Normally, meal allowances are not provided if your travel is for a period of fewer than 24 hours and does not include an overnight stay. However, if an exception is allowed the value of the meal allowance will be reported to Payroll Services in order to be reported and taxed on your paycheck. Please note that lunch for travel that does not include an overnight stay is not reimbursable.
Are there any circumstances in which an employee receiving a mileage reimbursement is subject to tax?
Yes. Under the following two scenarios mileage is subject to tax:
- Represented employees that have a callback provision in their collective bargaining agreement are subject to income tax on their callback mileage reimbursement.
- Employees that receive a mileage reimbursement as part of their moving and relocation reimbursement may be subject to income tax.
Are meals, mileage or any travel related expenses billed to the University as part of the vendor's services being provided subject to tax?
Travel related expenses billed to the University may be subject to tax if the vendor does not provide receipts to support the expenses incurred.
Sales and Use Tax Questions
Generally speaking what types of purchases are subject to sales or use taxes?
Purchases of tangible goods, i.e. computers, books, uniforms etc. are subject to sales taxes. Purchases of services are generally not subject to sales or use tax.
Can services ever be considered subject to sales or use tax?
Yes. Services that cannot be segregated from the cost of the tangible goods purchased may be subject to sales or use tax.
What is the sales tax rate for Cal Poly?
7.25% as of 1/1/2017. Cal Poly is not within the limits of the City of San Luis Obispo and is not subject to the City of San Luis Obispo's higher sales and use tax rate of 7.75%. If a vendor insists on charging you the City of San Luis Obispo's higher tax rate, then please have them contact Marc Benadiba, Financial Services at 805-756-5864.
Are software purchases that are downloaded directly to my computer exempt from Sales tax?
Yes. If the software is downloaded directly to your computer and you receive no physical materials from the vendor then sales taxes should not be charged on the transaction. It's important to note that ANY physical materials you receive, including a manual, or copies of the software on disk, subject the entire purchase to sales taxes.
Are freight or delivery charges subject to sales taxes?
If the vendor uses their own vehicle to deliver the merchandise, then the delivery charge is subject to sales taxes. If the vendor uses UPS, FedEx, or some other 3rd party service to deliver the merchandise, then the delivery charge is not subject to sales tax.
Out of State Vendor Questions
Do vendors coming from out of state incur any additional taxes or withholdings that they should be made aware of?
If an out of state vendor comes to California to provide services and does not have a business presence in the state of California then any payments made to them may be subject to a 7% withholding for state income tax. A vendor is deemed to have a California presence if they have an office in California or an address where they regularly receive and check mail. Out of state vendors without a California presence will have 7% state income tax withheld from any individual payment they receive that is greater than $1,500, or any payment they receive that puts their calendar year to date payments over the $1,500.
For example; Let's assume we have an out of state vendor coming from Nevada to California to perform three service related jobs for the University and the vendor does not have a physical address in California. Assuming the vendor is paid 3 payments of $700 each for the calendar year, no taxes are withheld on the first two payments, but the third payment will have 7% withheld because the third payment puts the total for the calendar year over $1,500.
Non Resident Alien Tax Questions
What is a Non-Resident Alien?
A Non-Resident Alien (NRA) is a non-U.S. citizen who has not been present in the United States for sufficient time to allow them to be taxed as a U.S. citizen. Payroll Services performs a substantial presence test in order to determine residency status for tax purposes.
I'm not a United States Citizen and I will be providing services to the University. Is there anything I need to do in order to be paid?
As a non-U.S. citizen, Cal Poly needs to determine your residency status for tax purposes. This determination needs to be made whether you are working as an independent contractor (for example a consultant) or an employee. All non-U.S. citizens working on campus must go thru an interview in Payroll Services (805-756-2605). The interview process can be started remotely via the web so that most of the data collection is completed before you arrive on campus. If you do not complete the NRA intake process, then Cal Poly must assume that your residency status for tax purposes requires the highest amount of taxes withheld, which can be as much as 37%.
I'm a NRA and will be providing a lecture at the University, but will not be paid, instead, I will receive an honorarium. Are there any tax considerations I need to be concerned with?
Yes. An honorarium, no matter how small the amount is still considered compensation for services rendered. As a result, the honorarium will result in tax reporting consequences that you should be aware of in advance.
I'm a NRA and will be providing a lecture at the University, but will not be paid, instead, the University will be paying for my food and lodging. Are there any tax considerations I need to be concerned with?
Yes. If the University directly pays for food and lodging expenses on your behalf, the expenses are considered income to you and will have tax reporting or withholding consequences that you should be aware of in advance. If you pay for the food and lodging expenses yourself, then submit appropriate documentation to the University to be reimbursed, the food and lodging expenses will not create tax reporting or withholding consequences.
Payroll Tax Questions
How do I determine how much my net pay will be after taxes and all deductions?
The Payroll Services website provides a paycheck calculator that allows you to view the net pay result of changing your tax withholdings or deductions.
I received an overpayment through payroll and now have to pay it back via an accounts receivable. Do I have to pay back the net or the gross amount of the overpayment?
If you are on direct deposit and you can make the appropriate amount available in your direct deposit checking account for reversal and reissuance, then you will only be responsible for paying back the net amount of the payroll accounts receivable. However, if you are not on direct deposit, or if you cannot make the amount of the overpayment available in your direct deposit checking account for reversal, then you will be required to pay back the gross amount of the overpayment you incorrectly received.
How does a payroll accounts receivable affect my income for W-2 purposes?
If you have received a payroll overpayment and you have not paid it back by 12/1, then your W-2 income will be overstated by the amount of the overpayment.
University provided housing questions
Is housing provided to an employee at no cost or at a discounted rate a taxable benefit to the employee?
The value of employer-provided lodging will be excludable from an employee's gross income and not subject to payroll taxes only if: (1) the lodging is furnished on the business premises of the employer; (2) the lodging is furnished for the convenience of the employer; and (3) the employee must accept the lodging as a condition of employment. If the three tests are met, the value of the lodging is excludable and not subject to payroll taxes. For more information please contact the Tax Coordinator.
This website and related web page content are expressly intended as general guidance. Its purpose is to inform the Cal Poly campus community of potential tax risk exposures related to federal, state and local regulatory agencies.
While Cal Poly's Financial Services department has made every effort to use the most current and accurate data, tax laws change frequently, and it is possible that some of the information may no longer be accurate. The University disclaims all liability from the mistreatment of information and materials contained in the tax web page. Its function is for administrative purposes only for Cal Poly. Please keep in mind that no one in their official role at the university, can act as a personal tax consultant, give individual tax advice, or represent an individual dealing with the Internal Revenue Service (IRS). Thus, any assistance the information on this website may provide is given as a courtesy to you, and should not be construed in any way as the rendering of legal or tax advice per IRS Circular 230.
The Tax Compliance Manager can only provide information from the IRS, California Franchise Tax Board, Board of Equalization, and other taxing agencies. Information regarding immigration and naturalization, employment, and tax filing regulations are the responsibility of each individual or entity who receives payment from Cal Poly or its auxiliaries.