Hello.

I hold H1B status and have since June 2003, before this I was on an OPT from my F1 student visa, working for the same employer.

As you obviously know, the SSN and Medicare tax collection should have started once my status changed in June 2003, but my employer, who filed the immigration paperwork, did not begin collecting these payments from me, and has just discovered the error after I (foolishly!) identified that my take home was much larger than a friend making exactly the same and deducting the same same in federal/state taxes.

So... fast forward two years and they are presenting me with a VERY large SS tax and Medicare tax bill to be paid starting from June 2003 - requiring 1040s to be refiled for 2003 and 2004.

What are my options? Do I have recourse or do I just need to ante up?

Thanks in advance. Great site, by the way!

Chris

Chris:

First, there is no requirement for you to re-file Form 1040 for 2003 and 2004. Form 1040 is for income taxes only, not Social Security and/or Medicare taxes.

The key issue is whether you properly notified your employer of the change in your visa status from F-1 to H-1B. It seems that this was properly done because the employer filed the immigration paperwork.

That being the case (and assuming that INS notified your employer of the visa change when you were so notified; a call to INS should confirm this), In my opinion, you have no liability for back Social Security and Medicare taxes to your employer for 2003 and 2004. The payment of those back taxes rests with the employer; that has always been the IRS position. It is then the employer's responsibility to collect the employee's share of these taxes. There are very definite time limits to collect these taxes, which (I believe) is 15 April 2004 for 2003 and 15 April 2005 for 2004. Since the date has passed in both cases, the employer is on-the-hook to pay these taxes, not you! They can, however, collect back Social Security and Medicare taxes for 2005.

That said, there is a practical aspect to this. If you lay these taxes entirely on your employer's shoulders (I believe the IRS would back you and enforce the decision with your employer), you might find yourself without employment rather quickly. You have to decide if your current job is worth paying back Social Security and Medicare taxes for the 18 month period in question.

Hello AtlantaTaxExpert,

Thank you so much. What type of lawyer should I follow-up with to verify these nuances? As I am in high demand in my field and knowling my work situation quite well, I am confident that I will not face employer retaliation.

Best,

Chris

Chris:

Any competent tax attorney should be able to verify what I have told you, and can represent you. In my opinion, the case is a no-brainer!

A call to your local bar association should get you the necessary referral.

Dear Atlanta tax expert,

I am exactly in the same situation as Chris, and in the processs of paying back my previous employer for 2003 and 2004 social security and Medicare taxes. Can you please let me know about the IRS rule number so that I can inform my employer about this rule (reimbursement needs to be completed by April of the following tax year in question)? Thanks,

Onder

Onder:

Sorry, I cannot provide you with the IRS case/ruling number.

However, a tax attorney will be able to cite case law, probably for a minimal research fee.

Thank you for the quick response. Is there a tax attorney you can recommend for this case? Thanks,

Onder

A call to your local bar association will give you some names to work with. I have no recommendations for tax attorneys.

Hi,
I am in the same position , but I haven't received any letter stating that I need to pay Social security taxes, chris, who told you to pay the taxes and how did you know you have to pay the taxes for the previous two years. If I want to pay them how should I pay them? Thanks for the help

RKJohn:

It is my humble opinion that you do NOT have to pay these back taxes, for the reasons cited above.

The employer requested the money, not the government, and as for me, the saga continues...