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HONORARIA AND SPEAKER FEES –
PAYMENT AND ACCEPTANCE BY NPCs
NPCs are often asked to pay honoraria and
speaker fees or to accept donations of honoraria. To help NPCs work
through the sometimes complex issues related to compensation for outside
speaking, writing and teaching, NAVREF offers the following decision
tree for NPC use in determining when honoraria and speaker fees may be
paid to VA employees without putting the employee at risk of violating
federal ethics regulations. Following the decision tree is discussion
of NPCs accepting honoraria as donations.
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1. Is the speaker a VA employee? |
NO
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Obtain the speaker’s Social
Security number and mailing address. Issue an IRS Form 1099
Misc. if total payment(s) to the individual in one calendar year
are $600 or more regardless of whether the check will be paid to
the individual or to a nonprofit.
See IRS Form 1099 Misc.
instructions. |
| YES |
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2. Is the subject of the
speaker’s presentation related to the speaker’s official VA
duties? [See definition of “related” at
§2635. 807(a)(2).] |
| NO |
YES |
UNCERTAIN |
è |
Have the speaker obtain a written
opinion from a VA attorney or ethics official and then follow
instructions for “yes” or “no.” |
| ê |
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Do not pay
an honorarium or speaker fee regardless of whether the speaker
is on annual leave or administrative leave/ authorized
absence/official absence
[5 CFR §2635.807] or intends to
direct payment to a nonprofit. Exception: teaching certain
courses offered by universities or sponsored and funded by the
federal government
[5 CFR 2635.807(a)(3)]. |
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| 3. Is
the speaker on off duty status (i.e., on annual leave or outside
of normal VA duty hours)? |
YES |
è |
Have the
speaker complete and submit an IRS Form W-9, or obtain the
speaker’s Social Security number and mailing address, before
issuing payment. Issue an
IRS 1099 Misc. if total payment(s) to the individual in one
calendar year are $600 or more regardless of whether the check
will be paid to the individual or to a nonprofit. |
| NO |
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If the speaker is on duty (normal VA duty
hours, administrative leave, authorized
absence and official absence = “on duty” status), do not pay the
speaker an honorarium or speaker fee. Payment would constitute
dual compensation [§18 USC 209] regardless of whether the
speaker directs payment to a nonprofit organization. |
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NAVREF discourages NPCs from accepting
donations of honoraria, speaking fees, writing fees and consulting
payments earned by VA employees. These potentially pose ethical
problems, may impose an unexpected tax liability on the donor, and
require the NPC to guard against use of the funds in ways that create an
actual or perceived personal benefit for the donor.
1. Ethical considerations: VA investigators
sometimes wish to have an
honorarium or speaker fee directed to an NPC as a donation in lieu of
accepting it personally. Some apparently do this in the belief that
donating a fee to a nonprofit relieves them of the need to
make sure the subject of their presentation is not related to their
official VA duties or the need to take annual leave. However, federal
ethics regulations at 5 CFR §2635.807 allow federal employees to earn
fees for presentations related
to their official duties only if they are teaching a course
requiring them to make multiple presentations during a program of
education or training sponsored and funded by the federal government or
by an institution of higher education, an elementary school or an
secondary school. As far as we have been able to determine, this is the
only exception; there is no exception for turning the payment into a
donation to a nonprofit.
2. Tax implications: Investigators sometimes also believe they
will not be assessed personal income taxes on a speaker fee if they
instruct the payer to send the check to a nonprofit. However, the IRS
is likely to view as income amounts earned any time there is a quid
pro quo -
an exchange of goods or services for payment -
or when an individual exercises control over dispensation of payment
(called "constructive receipt"
-
Treas. Reg. § 1.451-2(a)
).
Such payments may be taxable to that individual regardless of whether
payment goes to a nonprofit or the individual accepts it personally.
3. Personal benefit concerns:
Finally, investigators often wish to specify - or simply expect - that
their donations of speaking fees, writing fees and consulting payments
will be available to support their own research. In IRS terms,
their expectation is that use of the gift is "restricted" to their own
research. However, the IRS has asserted that such contributions
could provide a prohibited actual or perceived personal benefit to the
donor if the donor subsequently controls or even influences use of the
gift. This also jeopardize the nonprofit's exempt status because
no nonprofit assets may benefit an individual associated with the
organization. See the related article on donor advised funds
linked above.
Recommendation: An NPC
should accept such a restricted contribution only if the restriction
does not require that the funds be used in a way that could potentially
provide a personal benefit to the donor. When an NPC could not meet
this requirement in regard to PI contributions to their own research,
NAVREF recommends against their acceptance. An NPC might be able
to accept
speaker fees, etc., as "unrestricted" gifts and pool them for the
general support of VA research at the VAMC, but it still would have to
address ethical, tax and donor advised funds considerations.
Because these gifts impose on NPCs a considerable oversight and
administrative burden, NAVREF recommends a policy against accepting
gifts of speaking fees, writing fees and consulting payments as the
safer course for both the NPC and the PIs.
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