Quality Stores

News & Analysis as of

A Review of the Supreme Court’s 2013-2014 Term

The United States Supreme Court concluded its 2013-2014 term by issuing decisions in several highly publicized employment and employee benefits cases during the Court’s final scheduled sessions, including Noel Canning,...more

Severance Payments to Terminated Employees are Taxable Wages

Employers must treat severance payments to involuntarily terminated employees as wages. In an 8-0 opinion, the Supreme Court held that such payments are “remuneration for employment” for which taxes much be withheld and paid...more

In Quality Stores, the Supreme Court Holds that Severance Payments are Taxable FICA Wages

On March 25, 2014, the Supreme Court ruled 8-0 in favor of the government in the long-running Quality Stores litigation, holding that severance payments are taxable FICA wages, even if they fall within the category of...more

Supreme Court Confirms FICA Taxes Must be Withheld from Severance Payments

Finding severance payments to be a form of “remuneration for employment,” the United States Supreme Court in United States v. Quality Stores, Inc. held that such payments are taxable wages – and thus subject to withholding –...more

No Refunds: Supreme Court Settles Circuit Split over Severance Payment Taxation

In its ruling on United States v. Quality Stores, Inc., No. 12-1408 (U.S. Mar. 25, 2014), the United States Supreme Court put to rest a decade-old battle over whether severance payments made to employees are taxable as wages...more

U.S. Supreme Court’s Severance Ruling Impacts Future Unemployment Benefits

The decision in Quality Stores not only kills FICA tax refunds for millions of unemployed workers, but it also requires proactive employer actions to maximize future employer and state unemployment benefit payments to...more

US v. Quality Stores, Inc.: Supreme Courts Finds Severance Payments Taxable Wages Under FICA

In an 8-0 decision issued March 25, 2014 in United States v. Quality Stores, Inc., the Supreme Court held that severance payments made to employees who are involuntarily terminated are taxable wages for the purposes of...more

Employee Benefits: U.S. Supreme Court Upholds FICA Tax On Severance

In our February 2014 Information Memo, we suggested that an employer that had paid out severance benefits in 2010 and later years, and paid FICA taxes on such benefits, consider filing protective refund claims based upon a...more

Supreme Court Finds Severance Payments Subject to FICA Withholding

On Tuesday, the U.S. Supreme Court unanimously held that employer severance payments are subject to payroll withholding of FICA taxes, as well as employer contributions on the amounts paid. U.S. v. Quality Stores, Inc....more

U.S. Supreme Court Rules Severance Payments Can Be Taxed

It’s a common scenario for many employers. An employee who is terminated by the employer is offered a severance package. The employee would prefer that the severance payments are made under a 1099 (and therefore not subject...more

Supreme Court Holds Severance Payments Subject to FICA Tax

Compensation for services as an employee (called “wages” in the federal tax code) are subject to FICA (social security and medicare) tax as well as income taxes. Over the past 70 years, the courts, including the U.S. Supreme...more

Severance Payments to Terminated Employees are Taxable Wages under FICA

The Supreme Court recently held that severance payments made to involuntarily terminated employees constituted “remuneration for employment,” for which taxes must be withheld and paid under the Federal Insurance Contributions...more

Supreme Court Clarifies That Severance Payments Are Taxable

On Tuesday, the U.S. Supreme Court ruled unanimously (Justice Kagan recused herself) in United States v. Quality Stores, Inc., Case No. 12-1408 that severance payments made to employees who were involuntarily terminated are...more

Supreme Court Finds Severance Payments are Subject to FICA

On March 25, 2014, in a decision highly anticipated by employers, the U.S. Supreme Court held unanimously that certain severance payments paid to employees who were involuntarily terminated were taxable wages for purposes of...more

FICA Taxes on Severance Payments

In certain situations, an employee whose job is eliminated may receive a lump sum severance payment from the employer. The payments vary greatly, often dependent on the length of employment and reason for the termination. The...more

Supreme Court Decides Severance Not Exempt From FICA

Executive Summary: On March 25, 2014, the United States Supreme Court unanimously held that certain severance payments (described as "supplemental unemployment compensation benefits" or "SUBs") constituted taxable wages for...more

IRS Wins One At Supreme Court: Severance Pay Is Subject To FICA Tax

I blogged about the Quality Stores decision which at the district court and court of appeals levels held that certain severance payments were not subject to FICA (Social Security) taxes. The IRS had challenged the employer in...more

Supreme Court Holds Severance Payments are Taxable Wages under FICA

In a unanimous 8-0 decision issued on March 25, 2014, the United States Supreme Court held that severance payments made to employees terminated against their will are taxable wages under the Federal Insurance Contributions...more

Supreme Court Clarifies Tax Rules for Certain Severance Payments

The United States Supreme Court resolved a split among the Circuit courts over whether severance payments are “wages” and thus subject to taxation under the Federal Insurance Contributions Act (“FICA”). In a unanimous...more

Supreme Court Overturns The Sixth Circuit Court Of Appeals: Holds Severance Payments Subject To FICA Taxes

In this e-Alert, we address the recent United States Supreme Court decision in U.S. v. Quality Stores, Inc., et al, No. 12-1408 (Sup. Ct. 03/25/2014), whereby the United States Supreme Court unanimously overturned the prior...more

Severance Payments are Taxable under FICA

On Tuesday, March 25, 2014, the U.S. Supreme Court ruled in favor of the Internal Revenue Service in a dispute over the payroll tax treatment of certain types of severance compensation....more

Severance Pay As Wages: Business As Usual

Confirming what most employers have long assumed to be true, this week the U.S. Supreme Court held that severance payments made to terminated employees are “wages” subject to the Federal Insurance Contributions Act (FICA) tax...more

Supreme Court Rules That Severance Payments Are Subject to FICA Taxes

The U.S. Supreme Court has unanimously held that payments of supplemental unemployment benefits (SUB payments) are taxable wages subject to FICA tax withholding. The Court’s decision in United States v. Quality Stores, Inc.,...more

Supreme Court Rules That Severance Payments Constitute “Wages” For FICA Tax Purposes

On Tuesday, March 25th, the Supreme Court ruled that severance payments not linked to State unemployment benefits paid to involuntarily terminated workers were "wages" and thus subject to Social Security and Medicare taxes...more

Is There Quality to the Argument That Severance Payments Are Not Taxable "Wages"? – Supreme Court Holds That Severance Payments...

Earlier this week, on March 25, 2014, the U.S. Supreme Court handed down a highly publicized decision in the case of United States v. Quality Stores. In Quality Stores, the Court unanimously held that the severance payments...more

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