RAIN-2019-G09
EPA Policy on Participation in Fellowship, Internship, Scholarship and Similar Programs Funded by EPA Assistance Agreements
Notification Date: August 15, 2019
Purpose: This Recipient/Applicant Information Notice (RAIN) informs recipients of and applicants for EPA financial assistance (grants and cooperative agreements) that EPA has established a Policy on Participation in Fellowship, Internship, Scholarship and Similar Programs Funded by EPA Assistance Agreements (Participation Policy). This Policy is effective on October 1, 2019.
Summary: The purpose of the Participation Policy is to ensure that program participants are eligible to receive payments from recipients of EPA financial assistance. Eligibility is limited to citizens of the United States, its territories, or possessions, or lawfully admitted to the United States for permanent residence who are not excluded from participation in Federal Nonprocurement programs under 2 CFR Part 180. Additionally, the Participation Policy provides that recipients and program participants are responsible for complying with applicable tax laws with regard to participant support cost payments and that EPA does not provide advice on tax matters. EPA will implement the Participation Policy through the Participation Policy Term and Condition (Participation Policy T&C).
Background: On September 26, 2018, the Office of Inspector General issued Audit Report 18-P-0288. Among other things the OIG recommended that EPA require that participants in fellowship programs funded by EPA assistance agreements be citizens of the United States, its territories, or possessions, or be lawfully admitted to the United States for permanent residence as is the case for direct EPA fellowships under 40 CFR 46.135. EPA agreed with the OIG’s recommendation. The agency is extending the policy to assistance agreements funding scholarship and tuition remission programs for consistency with EPA’s regulations for training agreements, 40 CFR 45.135, which requires that trainees be citizens or lawfully admitted permanent residents.
There may be income tax implications when recipients pay program participants stipends, provide scholarships or tuition remission or other forms of compensation that are allowable under 2 CFR 200.1, 2 CFR 200.456 or 2 CFR 200.466. The responsibility for ensuring that such payments comply with Federal, state, tribal or local tax laws lies with the recipient and it is the program participant’s responsibility to report income to tax authorities. As provided in EPA’s Interim Guidance on Participant Support Costs (PSCs), “[R]ecipients, subrecipients, and program beneficiaries should consult their tax advisers, the U.S. Internal Revenue Service, or state and local tax authorities regarding the taxability of PSCs. EPA does not provide advice on tax issues relating to PSCs.”
Recipients may not make program participation payments to individuals who are excluded from participation in Federal Nonprocurement programs under 2 CFR Part 180. Federally funded fellowships and scholarships are included in the definition of Nonprocurement transaction at 2 CFR 180.970. Under 2 CFR 200.466 tuition remission and other compensation is a form of student aid that is similar to a scholarship. Participant support cost payments, scholarships, tuition remission and similar compensation for program participants are lower tiered covered Nonprocurement transactions for the purposes of 2 CFR 180.300 and EPA’s Suspension and Debarment Term and Condition. Recipients are responsible for checking the eligibility of fellowship and internship program participants in the System for Award Management (SAM) or obtaining eligibility certifications from the program participants.
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