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Discussion Starter · #1 ·
Hi all,

I am a Bulgarian citizen who currently lives in the UK. I lived in the US for ~10 years on student/work visa and am not a US permanent resident. I don't have a green card.

I left the US in Apr 2009 to move back to the EU and spent a short period of time in Bulgaria before permanently relocating to the UK in Aug 2009. During this 4 month period I continued to work for my former US-based employer on a contractual basis as a freelance consultant. I was based in Bulgaria during this entire time period. Since then, I have been based in the UK, and have only traveled to the US a couple of times for a week as a tourist.

I filed my last US taxes in Mar 2010 for income earner during Jan-Mar 2009 while still in the US. I have recently uncovered a very tricky and scary tax complication that has now made me liable for a vast amount of "unpaid" taxes. Here is what happened (I could only piece these events together in retrospect, as I was unaware of all of this):

* 3 months after I filed taxes (Jun 2010), my former employer submitted a 1099 form to the IRS declaring my consulting fees while based in Bulgaria as miscellaneous/freelance income
* A year later (Jun 2011), the IRS sent a notice to my last known US address (my former employer's address) suggesting that I had not filed my taxes properly and need to pay taxes for the additional income. I was unaware of this.
* The IRS sent several additional notices/reminders without my knowledge to my former employer's address. As a result, I missed the window of opportunity to dispute the claim.
* In Mar 2012, my employer finally informed me and forwarded to me all the correspondence from the IRS to my UK address.

I am now in the unfortunate position of being held liable for a vast sum of "unpaid" taxes which was erroneously reported to the IRS by my former employer. I have also incurred substantial penalties for not responding to the correspondence on time and have missed the window of opportunity to dispute the claim. My former employer never sent me the 1099 form, so I was unaware of the reported additional income. The "income" itself, was earned after permanently leaving the US. Based on my consultations with tax experts at the time and the conditions for a closer connection to a foreign country (irs.gov/businesses/small/international/article/0,,id=96377,00.html), I believe my consultant fees are not US-taxable and are rather Bulgaria-taxable.

I have now called the IRS who suggest that I contact my employer and request them to write a letter to explain the above and potentially void the 1099 form. I have reached out to my former employer and have explained/requested the above, but am somewhat sceptical about the degree of cooperation I would receive.

Could anyone share their thoughts on the above situation and that options I have in fighting this? The amount in question would be financially devastating and your help is thus tremendously appreciated.

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