Severance Pay

Federal Insurance Contribution Act (FICA) Taxes are United States federal payroll taxes levied to fund the Social Security and Medicare system. FICA Taxes burdens are divided between employers and employees... more +

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News & Analysis as of May 21, 2013

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Court Holds Severance Payments Not Subject To FICA Taxes; Refund Claims Should Be Filed Soon

by Brian M. Johnston, D. Scott Lindstrom, William J. Sanders, David N. Zimmerman | Polsinelli on 12/17/2012

In its recent decision, the United States Court of Appeals for the Sixth Circuit in U.S. v. Quality Stores, Inc., No. 10-1563 (6th Cir., 9/7/2012) held that certain severance payments made to former employees were not subject...more

Sixth Circuit Nixes FICA Tax on Severance Pay

by Dickinson Wright on 10/22/2012

The U.S. Court of Appeals for the Sixth Circuit has affirmed a Michigan Bankruptcy Court and approved a taxpayer’s request for a refund of FICA taxes paid on behalf of former employees. Quality Stores et al....more

FICA Taxes on Certain Severance Pay May Be Refundable

by Foley & Lardner LLP on 10/16/2012

The IRS may owe FICA tax refunds on severance payments made by employers to laid-off or terminated employees as part of reductions in workforce. Every employer that paid severance to laid-off employees as part of a reduction...more

Employers Should Evaluate Refund Opportunities Following Sixth Circuit Ruling on FICA Taxes and Severance Payments

by Ballard Spahr LLP on 10/12/2012

In United States v. Quality Stores, Inc., the Sixth Circuit held that payments of supplemental unemployment benefits (SUB payments) are not taxable wages subject to FICA tax withholding. Although the issue is not finally...more

Possible FICA Tax Savings on Severance Pay

by Leonard, Street and Deinard - Employee... on 9/18/2012

A recent Sixth Circuit Court of Appeals decision concluded that severance pay provided to employees as a result of layoff or discontinuance of a plant, operations or other similar condition is exempt from FICA taxes....more

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