Can a US citizen and employee sue his Australian employer for non-payment of IRS employment taxes?

My answer to Can a US citizen and employee sue his Australian employer for non-payment of IRS employment taxes?

Answer by Wray Rives:

First make sure that in fact your Australian employer is subject to US tax reporting and US employment tax.

Employment Status

Number one are you in fact an Independent Contractor (Self-Employed) or Employee? The following only applies if you are an employee.

Employment Outside the US

U.S. Citizens, Resident Aliens, and Nonresident Aliens employed outside the United States by a foreign employer are not generally subject to Social Security and Medicare tax withholding. However, an American employer with a foreign affiliate may request that Social Security and Medicare taxes be withheld from the U.S. citizen and resident alien employees of the foreign affiliate by filing Form 2032, Contract Coverage Under Title II of the Social Security Act.

Employment Inside the US

U.S. citizens, resident aliens, and nonresident aliens employed within the United States by a foreign employer are generally subject to Social Security and Medicare tax withholding by the foreign employer. Revenue Ruling 92-106, 1992-2 C.B. 258 provides detailed information on this subject. Certain exceptions to mandatory Social Security and Medicare tax coverage are listed in IRS Publication 15, Circular E, Employer’s Tax Guide. However, individuals employed in the United States by a foreign employer may be exempt from U.S. Social Security and Medicare taxes under the terms of a Totalization Agreement.

Special rules apply to Persons Employed by a Foreign Government or International Organization – FICA.

If your employer should be paying payroll taxes, start with your state’s labor department or the IRS, but you can certainly sue the foreign employer. Hopefully you are no longer working for the company as this will certainly not have a positive impact your relationship with this employer.

Can a US citizen and employee sue his Australian employer for non-payment of IRS employment taxes?