News & Analysis as of

Supreme Court Decides in Favor of IRS in Quality Stores: FICA Generally Applies to Severance Payments

The Supreme Court of the United States has decided in favor of the Internal Revenue Service in United States v. Quality Stores, Inc., holding that severance payments made pursuant to plans that did not tie payments to the...more

Preserve Your Right To A Payroll Tax Refund

A disagreement between two federal appeals courts regarding whether payroll taxes must be paid on severance payments made to laid-off workers has landed the issue in front of the U.S. Supreme Court. Oral arguments began...more

Severance Payments: To Tax or Not to Tax, that is the Question!

On October 1, 2013, the U.S. Supreme Court agreed to hear the federal government's appeal of the Sixth Circuit Court of Appeals' decision in United States v. Quality Stores, Inc. (In re Quality Stores, Inc.), 693 F.3d 605...more

The Supreme Court Will Decide Whether FICA Taxes Is Owed On Severance Pay

I blogged about Quality Stores, a case in which the Sixth Circuit Court of Appeals held that severance pay is not subject to FICA (Social Security) taxes if certain requirements are met: The severance payments must be made...more

Deadline for Filing FICA Tax Refunds is April 15

As previously reported, the payment of certain severance benefits may be exempt from FICA taxes. Under the Sixth Circuit’s decision in Quality Stores, severance pay made in connection with an involuntary separation from...more

File for FICA Tax Refunds Before April 15

As previously reported, the payment of certain severance benefits may be exempt from FICA taxes. Under the Sixth Circuit’s decision in Quality Stores, severance pay made in connection with an involuntary separation from...more

Sixth Circuit Will Not Rehear Quality Stores Decision that Severance Pay in Connection with a Reduction in Force is not Subject to...

On September 7, 2012, the Sixth Circuit Court of Appeals held in United States v. Quality Stores, Inc. that severance payments to former employees pursuant to an involuntary reduction in force are not taxable "wages" for...more

Legal Alert: The 2012 Tax Litigation Year in Review: Important Events

The year 2012 was quite an interesting one for tax controversy. Whereas 2011 brought a win for the Treasury on deference issues in Mayo Foundation for Medical Ed. v. United States, 131 S. Ct. 704 (2011), 2012 was the year...more

Quality Stores Decision Could Lead to Significant Refunds of FICA Tax

The U.S. Court of Appeals for the Sixth Circuit recently held that certain dismissal payments were Supplemental Unemployment Compensation Benefits (SUB) exempt from FICA taxes—a clear split with the U.S. Court of Appeals for...more

Sixth Circuit Decision Offers FICA Tax Refund Opportunities for Severance Pay

Any employer that implemented reductions in force or layoffs after 2008 should consider filing refund claims for the Federal Insurance Contributions Act (FICA) taxes paid on severance benefits based on a recent Sixth Circuit...more

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