A fellowship or scholarship (hereafter “fellowship”) stipend payment is one made to aid a person in the pursuit of studies or research. However, if a payment is made on the condition that the individual perform some sort of teaching, research or other service, it must be treated as employee wages.

CSU is responsible for correctly classifying all stipend payments. Misclassification of employees, and failure to withhold tax when withholding is required, may expose the University to significant adverse tax consequences. If a misclassification occurs, it could result in the assessment of tax by the IRS. The resulting assessment is typically over 40% of the cost of the stipend payment.

This form will help in making fellowship vs. employee determinations to help mitigate the University’s risk for misclassification. Payments made to students working in a graduate assistant appointment are classified properly as wages and, therefore, this form does not apply to Graduate Assistantship appointments.