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The IRS recently announced that severance payments are taxable wages under FICA, and thus employers who seek tax refunds on those payments will be denied. The IRS’s position reflects the United States Supreme Court’s ruling...more
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
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
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
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
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
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
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
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
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
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
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
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
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
On March 25, 2014, the Supreme Court held in United States v. Quality Stores, Inc. that severance payments are taxable wages for FICA purposes. This decision confirms employers’ responsibility to treat severance pay as...more
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
I have to admit, when I read the news that the Supreme Court had ruled earlier this week that severance payments are “wages” subject to payroll taxes, I thought I was on crazy pills: Didn’t we already know that? But,...more
On March 25, 2014 the U.S. Supreme Court unanimously held that a certain type of severance payment known as supplemental unemployment compensation constituted “wages” subject to Federal Insurance Contributions Act (FICA)...more
The Supreme Court has agreed to review the Sixth Circuit Court of Appeals decision in United States v. Quality Stores which held that severance payments to involuntarily terminated employees were supplemental unemployment...more
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
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
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
On October 1, 2013, the Supreme Court of the United States agreed to hear a case concerning whether employees’ severance payments are taxable. The case, United States v. Quality Stores, Inc., came out of the Sixth Circuit...more
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