Employer Failed to withold FICA Taxes.....
#1
Forum Regular
Thread Starter
Joined: Jun 2004
Location: Hoboken, NJ
Posts: 54
Employer Failed to withold FICA Taxes.....
I transfered to the US in 2004 on an L1 visa. My employer paid UK National Insurance by international transfer on my behalf instead of US Social Security. This was deducted from my bi-weekly pay check. However, from Jan 2009 to Dec 2010, my employer stopped deducting anything for National Insurance from my paycheck and did not make any payments to UK National Insurance or US Social Security. This was a clerical error on their part but I did not catch this on my pay stub or W2.
In Jan 2011 I received a green card and so starting paying FICA. It was then I noticed the difference in my pay and I informed HR that there was a problem. I have since left the company for a new position. I was recently contacted by my former employer who want to pay their part of the FICA owed for 2009-2010. However, they cannot make their payment until I pay my share (which is a large sum). So, my question is - am I liable for this payment or is this on my former employer as it was their error?
In Jan 2011 I received a green card and so starting paying FICA. It was then I noticed the difference in my pay and I informed HR that there was a problem. I have since left the company for a new position. I was recently contacted by my former employer who want to pay their part of the FICA owed for 2009-2010. However, they cannot make their payment until I pay my share (which is a large sum). So, my question is - am I liable for this payment or is this on my former employer as it was their error?
#2
Re: Employer Failed to withold FICA Taxes.....
Well you have to pay a part and they pay the other half, so you'd still be on the hook for half of it.
#3
Lost in BE Cyberspace
Joined: May 2010
Location: San Diego, California
Posts: 9,620
Re: Employer Failed to withold FICA Taxes.....
I transfered to the US in 2004 on an L1 visa. My employer paid UK National Insurance by international transfer on my behalf instead of US Social Security. This was deducted from my bi-weekly pay check. However, from Jan 2009 to Dec 2010, my employer stopped deducting anything for National Insurance from my paycheck and did not make any payments to UK National Insurance or US Social Security. This was a clerical error on their part but I did not catch this on my pay stub or W2.
In Jan 2011 I received a green card and so starting paying FICA. It was then I noticed the difference in my pay and I informed HR that there was a problem. I have since left the company for a new position. I was recently contacted by my former employer who want to pay their part of the FICA owed for 2009-2010. However, they cannot make their payment until I pay my share (which is a large sum). So, my question is - am I liable for this payment or is this on my former employer as it was their error?
In Jan 2011 I received a green card and so starting paying FICA. It was then I noticed the difference in my pay and I informed HR that there was a problem. I have since left the company for a new position. I was recently contacted by my former employer who want to pay their part of the FICA owed for 2009-2010. However, they cannot make their payment until I pay my share (which is a large sum). So, my question is - am I liable for this payment or is this on my former employer as it was their error?
While it might have been a clerical error, how come after some 6 years of paying NIC contributions you did not spot that you were no longer paying them?
If you want credit for 2009-10 Social Security payments then I think you have no choice but to pay up.
#4
Lost in BE Cyberspace
Joined: Jan 2006
Location: San Francisco
Posts: 12,851
Re: Employer Failed to withold FICA Taxes.....
What if he's not bothered one way or the other? The employer could well be in legal difficulties with the federal government if it came to light that they had failed to withhold and pay the required social security and medicare taxes. The OP may be able to leverage that with the ex-employer.
#5
Lost in BE Cyberspace
Joined: May 2010
Location: San Diego, California
Posts: 9,620
Re: Employer Failed to withold FICA Taxes.....
Well he reported it as a problem to his, then HR, so I presume he does 'bother' one way or the other.
#6
Forum Regular
Thread Starter
Joined: Jun 2004
Location: Hoboken, NJ
Posts: 54
Re: Employer Failed to withold FICA Taxes.....
While it might have been a clerical error, how come after some 6 years of paying NIC contributions you did not spot that you were no longer paying them?
__________________________________________________ _______________
The error happened at the same time as may salary changed and the company moved to online pay stubs. I didn't check them over very well so did not notice the mistake.
I am not too concerned with getting credit for 2 years of NIC payments. My main concern is 1) being on the wrong side of the IRS/Taxman and 2) having to find $10k+ to make the back payments.
__________________________________________________ _______________
The error happened at the same time as may salary changed and the company moved to online pay stubs. I didn't check them over very well so did not notice the mistake.
I am not too concerned with getting credit for 2 years of NIC payments. My main concern is 1) being on the wrong side of the IRS/Taxman and 2) having to find $10k+ to make the back payments.
#7
Re: Employer Failed to withold FICA Taxes.....
I would imagine they'll get their money off you one way or another. I had a similar thing happen to me in the UK and wound up having to pay taxes due to some clerical error though they allowed me to set it up as a payment plan rather than a lump sum.
#8
BE Forum Addict
Joined: Apr 2011
Location: The Shire
Posts: 1,117
Re: Employer Failed to withold FICA Taxes.....
You should be, unless you intend to make voluntary contributions to NI. You're indicating that you came to work in the US for a UK employer. Under the US/UK Totalization Agreement, that employer can only pay NI, in lieu of SS and Medicare, for 5 years. After that point, they are required to with hold FICA, and not NI.
http://www.ssa.gov/international/Agr...k.html#monthly
(scroll up to: Coverage and Social Security taxes)
Using the 2011 maximums (I can not find 2009 or 2010), the tax rate is 6.2% for employers on a maximum of $106,000. The employee rate is 4.2%, or $4,452. Two years prior may be less than $10k, unless the percentages were higher (I do not know). For 2011 only, $10k+ only applies to self-employed individuals.
SS taxes are not paid to the SSA, but to the IRS (under Title VIII). If you now pay the SS (in arrears), your 2009 and 2010 tax return would be incorrect as regards your income declarations (overpaid).
As for all IRS taxes, the onus is on the individual to be sure the amount of tax being paid is correct. Sorry, but that's how they work. It is the law to contribute to SS if, as in your case, the individual is being paid for work in the US and are liable for US taxes.
http://ssa-custhelp.ssa.gov/app/answers/detail/a_id/435
http://ssa-custhelp.ssa.gov/app/answ.../contributions
You're in a hard place, and not entirely of your own making. That's unfortunate. But you might be better served if you attempt to correct the situation, and forget about trying to make someone else pay for what was ultimately your own obligation.
http://www.ssa.gov/international/Agr...k.html#monthly
(scroll up to: Coverage and Social Security taxes)
SS taxes are not paid to the SSA, but to the IRS (under Title VIII). If you now pay the SS (in arrears), your 2009 and 2010 tax return would be incorrect as regards your income declarations (overpaid).
As for all IRS taxes, the onus is on the individual to be sure the amount of tax being paid is correct. Sorry, but that's how they work. It is the law to contribute to SS if, as in your case, the individual is being paid for work in the US and are liable for US taxes.
http://ssa-custhelp.ssa.gov/app/answers/detail/a_id/435
http://ssa-custhelp.ssa.gov/app/answ.../contributions
You're in a hard place, and not entirely of your own making. That's unfortunate. But you might be better served if you attempt to correct the situation, and forget about trying to make someone else pay for what was ultimately your own obligation.
#9
Re: Employer Failed to withold FICA Taxes.....
I'm assuming that you will be able to file an adjusted tax return for the years that social security payments were not withheld if you now pay them instead. The payment of the ss payment will lower your taxable income; perhaps enough to cover at least 1/2 of the amount due.
#10
Lost in BE Cyberspace
Joined: Jan 2006
Location: San Francisco
Posts: 12,851
Re: Employer Failed to withold FICA Taxes.....
I'm assuming that you will be able to file an adjusted tax return for the years that social security payments were not withheld if you now pay them instead. The payment of the ss payment will lower your taxable income; perhaps enough to cover at least 1/2 of the amount due.
#11
Re: Employer Failed to withold FICA Taxes.....
I ended up in a similar situation in my first position. I think I was exempt from FICA for a while as I was nonresident for tax purposes (? can't recall exactly if that was it), and when I became resident for tax purposes, this was missed by my employer and by me. I realised it when I completed my tax return for that year and informed my employer. They arranged for me to make up the lost payments on my side and they made up the missed payments on their side. I think this was spread over a tax year or two, and as pointed out, it ends being less "in your pocket" than it looks, because your tax bill otherwise is reduced.
It always seems odd to me that when people find out their employer underpaid them, they are on it like a flash and insist on getting what they are owed. When their employer screws up and it means they got paid more than they should (albeit in this case being due to incorrect taxation), the same principle does not apply for some reason. No-one likes paying money, but a debt is a debt, regadless of who you owe it to.
It always seems odd to me that when people find out their employer underpaid them, they are on it like a flash and insist on getting what they are owed. When their employer screws up and it means they got paid more than they should (albeit in this case being due to incorrect taxation), the same principle does not apply for some reason. No-one likes paying money, but a debt is a debt, regadless of who you owe it to.
#12
Forum Regular
Thread Starter
Joined: Jun 2004
Location: Hoboken, NJ
Posts: 54
Re: Employer Failed to withold FICA Taxes.....
You should be, unless you intend to make voluntary contributions to NI. You're indicating that you came to work in the US for a UK employer. Under the US/UK Totalization Agreement, that employer can only pay NI, in lieu of SS and Medicare, for 5 years. After that point, they are required to with hold FICA, and not NI.
http://www.ssa.gov/international/Agr...k.html#monthly
.
http://www.ssa.gov/international/Agr...k.html#monthly
.