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  • Forreign assignments and taxes

    I also posted this under Disrimination as I am sure this is gross misconduct and discrimination. I’m not a US Citizen nor a GreenCard Holder. I have always had a current, valid work status (H1B1) in the US. I worked for a company in Texas and during my employment got assigned to several foreign assignments. Slovakia, Italy and Mexico. Taxes were never withheld and the excuse was “The system does not cater for your situation. Taxes will not be withheld while on assignment abroad”. And they never did withhold taxes. In 2001 I was called in by HR (While in the office in Dallas, TX) and notified that I owe the company (NOT THE IRS) 29,000.00 dollars for hypothetical taxes not withheld. I agreed under heavy protest to pay back 50.00 a month and it was accepted. I resigned end of 2002 and was “forgiven the debt”. Before I resigned I was on assignment in Italy for the 18 months prior to my resignation and hypothetical taxes were withheld (I think it was for filing the taxes in Italy by Deloitte and Touch, it was mandatory to use D&T to file our taxes in foreign countries). As I said, I resigned end of December 2002, started with a new company in Seattle (coming form Italy). My previous employer filed my income received while in Italy with the IRS in the US. I owe the IRS 40,000.00 for 2002 and 12,000.00 for the forgiveness of debt also filed with the IRS. WHAT ARE MY RIGHTS?

  • #2
    Originally posted by dagilli
    I also posted this under Disrimination as I am sure this is gross misconduct and discrimination. I’m not a US Citizen nor a GreenCard Holder. I have always had a current, valid work status (H1B1) in the US. I worked for a company in Texas and during my employment got assigned to several foreign assignments. Slovakia, Italy and Mexico. Taxes were never withheld and the excuse was “The system does not cater for your situation. Taxes will not be withheld while on assignment abroad”. And they never did withhold taxes. In 2001 I was called in by HR (While in the office in Dallas, TX) and notified that I owe the company (NOT THE IRS) 29,000.00 dollars for hypothetical taxes not withheld. I agreed under heavy protest to pay back 50.00 a month and it was accepted. I resigned end of 2002 and was “forgiven the debt”. Before I resigned I was on assignment in Italy for the 18 months prior to my resignation and hypothetical taxes were withheld (I think it was for filing the taxes in Italy by Deloitte and Touch, it was mandatory to use D&T to file our taxes in foreign countries). As I said, I resigned end of December 2002, started with a new company in Seattle (coming form Italy). My previous employer filed my income received while in Italy with the IRS in the US. I owe the IRS 40,000.00 for 2002 and 12,000.00 for the forgiveness of debt also filed with the IRS. WHAT ARE MY RIGHTS?
    well, I hope some of the 'more knowledgable others' who post here will contribute, and correct any errors.

    Basically, a US business is not required to withhold federal taxes if the employee is a non-resident alien. The responsibility to file a return and pay the taxes is on the non-resident alien employee. It would be nice if the business would notify the employee about the tax consequences before it becomes an issue, but businesses are not always that nice.

    Concerning the HR's request for repayment of non-withheld taxes-- if during the time you worked in the US you should have been treated as a resident alien, and the company did not withhold taxes, but should have, the company is liable and could have to pay penalties for failure to withhold and deposit trust fund taxes. The company would also be responsible for collecting any non-withheld taxes through remuneration. If total remuneration has not been made by the end of the year, it is the responsibility of the employer and employee to settle the matter.
    If the employer were to pay the employee's share of the taxes, it would have to treat the amount as wages, on which there would still be a tax liability.


    A taxpayer's rights include disputing the tax liability. It would be best to let a qualified person such as a tax lawyer, a CPA, an enrolled agent or a tax advocate represent you in any disputes, however the past due taxes will probably have to be paid. The IRS can arrange a payment schedule for the collection of past due taxes.
    "What would a reasonable person do?"

    aryels
    A.S. Paralegal
    Criminal Justice Student--B.S.

    "Give this guy 15 cents and tell him to go to hell."

    Comment


    • #3
      Thank you aryels. Most of what you said confirmed what I am thinking; I'm not liable for any taxes in the US while abroad. BUT, back in the US all taxes were witheld correctly, filed correctly and my returns were filed as well for those. As a matter of fact, the IRS is holding a refund of 4200.00 for 2003 because I did not file for 2002. I worked in Italy from July 2001 until December 2002. My employer filed my income for 2002 in the US (0.00 witholdings for the US) and now the IRS is breathing down my neck. The main thing is I do not have any past due taxes. I made sure that taxes were witheld for every second I worked in the US while not on assignment abroad. No problem here.

      Comment


      • #4
        Originally posted by dagilli
        Thank you aryels. Most of what you said confirmed what I am thinking; I'm not liable for any taxes in the US while abroad. BUT, back in the US all taxes were witheld correctly, filed correctly and my returns were filed as well for those. As a matter of fact, the IRS is holding a refund of 4200.00 for 2003 because I did not file for 2002. I worked in Italy from July 2001 until December 2002. My employer filed my income for 2002 in the US (0.00 witholdings for the US) and now the IRS is breathing down my neck. The main thing is I do not have any past due taxes. I made sure that taxes were witheld for every second I worked in the US while not on assignment abroad. No problem here.
        well, now..hold on. Don't get excited, as I am probably one of the least qualified persons on the board, and am only learning this subject. I wish that some of the others would respond.
        There are also situations of resident aliens working abroad, in which case you might qualify to exclude earnings from income. I might have to refer to IRS Tax topic 854 or Pub 54.
        Plus, if there were any years spent working in more than one country, you might qualify as a dual-status alien, with different tax rules.
        "What would a reasonable person do?"

        aryels
        A.S. Paralegal
        Criminal Justice Student--B.S.

        "Give this guy 15 cents and tell him to go to hell."

        Comment


        • #5
          ..No I won't get exicted. I wish the same, that is that others would respond since it is very difficult to figure this one out. I'm trying to be objective and believe me the last thing I want to do is to do this wrong. I need to do the right thing since I'm applying for permanent recidency and if any income shows up in the US for those dates that I did not work here, it will count against me and this is actualy another major issue. My current work VISA was approved based on the fact that I've been out of the US for more than one year and that resets the INS clock to zero and none of the time I spent here before is a factor. Unless....I show income....and that will jeoperdize my application for permanent recidensy.

          Comment


          • #6
            Okay, the very first step is to determine the status of either resident alien, non-resident alien and/or dual- status alien. Since you are not a 'green card' alien, you would have to fulfill the requirements of the 'substantial presence test.'
            To make such a determination, you would have to know the dates of entry and departure to and from the US.

            IRS Topic 851
            http://www.irs.gov/taxtopics/tc851.html
            Last edited by aryels; 08-05-2005, 04:04 PM.
            "What would a reasonable person do?"

            aryels
            A.S. Paralegal
            Criminal Justice Student--B.S.

            "Give this guy 15 cents and tell him to go to hell."

            Comment

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