Tax Assessment

The University of Southern California must comply with all local, state and federal tax regulations.

The university cannot extend tax advice. If you have questions regarding tax regulations please consult a tax professional.

Sales and use tax

The university is not sales tax exempt. The California Board of Equalization requires that the university pay sales tax to California merchants and accrue use tax for out-of-state merchants on all taxable transactions.

If the tax amount stated on an invoice is not correct and the supplier does not have a presence in California, use tax will be accrued for the difference and submitted to the state. Use tax is not accrued for California suppliers. California suppliers are responsible for charging accurate sales tax.

Invoice review process for applicable sales tax (Effective July 1,2017)
Invoices Dated Sales Tax Rate Partial Sales Tax Rate*
07/01/2017 – Current Date 9.25% 5.3125%
01/01/2017 – 06/30/2017 8.75% 4.8125%
01/01/2013 – 12/31/2016 9.00% 4.8125%
All other dates, visit the California BOE Sales & Use Tax history page.
* The partial exemption provides that sales of qualifying equipment sold to USC be taxed at a lower rate. For more information, visit the CA State Board of Equalization.

California income tax withholding

The Franchise Tax Board requires the university to withhold 7% income tax on payments to non-California resident service providers.

For tax purposes, a non-California resident is defined as a payee that has no permanent residence or place of business in California and is not registered with the Secretary of State to do business in California.

Non-California residents subject to withholding include:

  • Corporations
  • Limited liability companies (LLCs)
  • Partnerships
  • Individuals

Types of income subject to withholding include but are not limited to:

  • Payments for services (consultants, speakers, designers, etc.) performed in California
  • Payments of royalties, leases, and rents, for property (real or personal) located in California

Payments made to non-California residents are exempt from this tax withholding by USC if ANY of the following criteria apply:

Payment to Non-California Residents for relevant services performed INSIDE California
ALL suppliers with a physical California presence Non-resident suppliers that DO NOT have a physical California presence
Are you eligible for a full exemption from the nonresident 7% withholding? Supplier qualifies as a CA resident No, I am not exempt Yes, full exemption
Type of payments exempt Payments for goods and services Payments for goods and relevant services performed OUTSIDE of California Payments for goods and services
Is the form 590 required? NO NO YES
Supplier Portal Application Requirements Select No, I or my business qualifies as a CA resident under the Tax Information tab and a California address must be added under the Addresses tab. Select No, I am not exempt under the Tax Information tab and indicate on each invoice the percentage of services performed within California. Select the Yes, full exemption under the Tax Information tab and upload the Form 590.
Note: The Form 590, Withholding Exemption Certificate, is used to certify a full exemption from nonresident withholding from payments to non-California suppliers traveling to the state of California to provide services. Visit the Franchise Tax Board website to review if eligibility applies. For non-exempt service providers: each of your invoices will be reviewed to determine if the invoice payment being issued is subject to the 7% withholding.

1099 reporting

Payment Services issues a Form 1099-Misc to U.S. payees according to current Internal Revenue Service (IRS) guidelines. Types of income subject to 1099 reporting include but are not limited to:

  • Payments for services (consultants, speakers, designers, etc.)
  • Payments of royalties, leases, and rents, for property (real or personal)

Payments totaling less than $600 in a calendar year generally are not 1099 reportable. Send questions regarding 1099 reporting to aphelp@usc.edu (include 1099 in the subject of the email).

Additional information for foreign payees

The following information applies to foreign payees performing work in the U.S. Foreign payees subject to withholding include:

  • Foreign corporations/partnerships
  • Foreign individuals

Federal income tax withholding

The IRS requires the university to withhold 30% income tax on United States (U.S.) source income payments to foreign payees, regardless of amount.

Types of income subject to withholding include but are not limited to:

  • Payments for services (consultants, speakers, designers, etc.) performed in the U.S.
  • Payments of royalties, leases, and rents, for property (real or personal) located in the U.S.

Payments made to foreign payees are exempt from this tax withholding by USC if ANY of the following criteria apply:

  • The relevant services are performed outside the U.S.; or
  • Payee is a resident of a country that has a tax treaty with the U.S. (payee must provide appropriate tax forms prior to processing payment).

1042 reporting

Payment Services issues a Form 1042-S to foreign payees subject to 1042 reporting according to current IRS guidelines.

Please submit questions regarding 1042 reporting to (include 1042 in subject of the email):

Form delivery

The table below describes the mailing deadlines for tax withholding forms. Please wait for ten (10) business days before contacting USC in the event that you do not receive your form.

Form Mailing Deadline
(from USC)
1099 January 31
1042 March 15