IRS regulations require that NRA's (generally students on an F-1
or J-1 visa who have been in the United States for less than five
years) who are receiving a prize/award will be subject to 30%
federal withholding on the payment. Prizes/awards are amounts
received by an individual primarily in recognition of religious,
charitable, scientific, educational, artistic, literary or civic
achievement or received as a result of entering a contest.
Currently, tax treaty provisions are not available to exempt a
prize/award from the 30% tax withholding. Hence, when UBF receives
a Disbursement Request for a prize/award to an NRA, UBF will
withhold 30% from the prize/award amount and remit it to the IRS.
The balance will be issued directly to the individual. At the end
of the calendar year, an appropriate 1042-S tax reporting form will
be prepared by UBF and sent to the individual.