Jerseygirl

Even if it's not a temporary position he can still pay NI contributions if he wishes.

rew1000

I believe the American expression is "Good luck with that"! The liability to pay tax is a personal liability, and is not directly connected to any withholding that an employer does.

Bottom line: as far as both the UK and US are concerned, liability for income tax is based on country of physical residence. National Insurance / Social Security is a little more flexible, but for income tax, if you live here, you owe the IRS a tax form.

The "filling in forms when you leave" idea is what is generally known as the "sailing permit". The form is 1040-C: basically involves completing a tax form. From what I've read, the requirement still theoretically exists but was last enforced around the time people used to sail home.

If you're looking to live here permanently, it would be worth straightening this out (and you might even end up with a refund...)

Michael

It is hard to say since there is a tax liability for work being performed in the US but the government still does not know yet. Since your company didn't file any W2 forms with the government, the government currently doesn't know that you have been getting paid. However when all records are cross checked, the IRS will probably garnish your bank accounts and wages.

A friend of mine from the UK set up a subsidiary in the US in the 1970s. For 4 years (no statute of limitations when you don't file returns) he didn't pay any US taxes. All of a sudden the IRS started the process of freezing his bank accounts. Immediately he flew back to the UK and threatened to not return to the US unless the company straightened out the problem (his case was different than yours in that he didn't pay either UK or US tax).

Michael

It is true that tax is a personal liability but the company broke so many laws that it would be in their best interest to solve the problem. It is the companies responsibility to have the employee fill out the W4 form, withhold social security and medicare taxes (also pay the companies share) unless a waiver is applied for, withhold federal income taxes and state taxes (N/A in Texas), pay unemployment insurance, pay state disability insurance (workmans comp), and issue a W2 to the government and the employee at the end of the year.