We have three employees from Europe who are working in the USA on special projects at the customer's of our USA division.
They came to the US on L1B visas in November of 2008 and will remain throughout 2009 and part of 2010.
During this time they are living in apartments and driving leased automobiles. They had to apply for Social Seuciry cards to obtain US drivers' licenses.
Do these individuals need to file an IRS - 1040 form for 2008, 2009 etc.
What about Social Security and Medicare taxes?
One individual is from France, one Germany, one Switzerland.

Thank you.

L1B is work visa. The income is subject to SS tax, Medicare tax and income taxes. They must file tax returns if the income exceeds the filing requirements.

For 2008, they will file nonresident tax return and must file return if income in 2008 (as reported on W2) is $3500 or more.
For 2009, they will file resident tax return.

On L1-B, there is no treaty benefit so citizenship will not make any difference.
Read about L1-B tax filing: Your U.S. Tax Return: The U.S. Visas