Hi there,
First post in the site!

I have a question regarding the non-paid FICA taxes from Sept. 05 - Dec 06.

I started working with my H1-B after my optional practical training and my company didn't cut any SSN and Medicare taxes from me since 09/2005. However, just yesterday I learned that they should have been! Therefore, they noticed me that they will be starting to cut FICA taxes (starting from January 2007 - one time retrospect cut). Furthermore, they are going to pay their portion of (7.65%) taxes for the time span between 09/05 and 12/06.

Now, my question is should I pay my portion (7.65% too) and how can I do that? Should I fill tax amendment forms for 2005/6? Please advice.

Thanks kindly...

No amendment is necesarry, as you CANNOT pay FICA taxes on your federal income tax return. Such taxes must be paid by the employer.

Your employer is in for a surprise, as the IRS will require them to pay the FULL 15.3% for Sept 2005 through Dec 2006.

The IRS position on this issue is clear: the EMPLOYER is responsible for paying the FICA taxes due and can collect the employee's share of the FICA taxes from the employee's salary. However, the employer CANNOT collect back FICA taxes retroactively from the employee, even though they are obligated to pay the taxes.

You have done everything required of you. Your employer may come back to you and demand that you pay "your share" of the back FICA taxes. Your employer has NO LEGAL STANDING to make this demand. You CAN refuse, though it may result in your being fired. Regardless, it may be worth it, considering the amount of money involved. If you do resign over this, and the employer decides to take you to court, they WILL LOSE!

Thank you for the follow-up. I have been doing my own research, too. Especially some threads from taxalmanac were really useful.

Now, according to my investigation here is what I have learned (warp speed summary):

I'm (as the employee) liable for back-owed 7.65% fica taxes however my employer is THE responsible party.

There is a possibility that my employer will pay their portion and ask me to pay the rest, so that they think that they did their part (to cover their own a**ses). If something like that happens I decided not to pay a cent. And, if IRS comes after me, they will deal with my employer not me (practical reasons). The final result is going to be my employer paying all back-owed taxes and then probably asking half of it from me.

However, as some CPA's suggested, I am thinking to offer them one-time settlement. I will ask them to pay all the amount at once and then create an account receivable for my portion for next 12 months. By this way, everything will be resolved (kind of win-win situation). Even tough I lose some money I will keep my relationship in a positive manner with those negligent HR / CPA / Payroll people!

ONE question to you though, can you please show me some publications or guidelines which you have mentioned here: "The IRS position on this issue is clear: the EMPLOYER is responsible for paying the FICA taxes due and can collect the employee's share of the FICA taxes from the employee's salary. However, the employer CANNOT collect back FICA taxes retroactively from the employee, even though they are obligated to pay the taxes."

Best,

Check out IRS Pub 15.