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Update: Supreme Court Holds that Severance Payments are FICA Wages

Apr

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April 1 , 2014 | Posted by Brian Stautberg |

Update: Supreme Court Holds that Severance Payments are FICA Wages

In January, we posted a blog alerting readers to the April 15 deadline for filing a protective claim for refund for FICA taxes paid on severance payments made to terminated employees. The ability to file for a protective claim for refund was based on a Sixth Circuit decision in a case involving Quality Stores that held that certain severance payments would not be subject to FICA tax. That ruling was subject to review by the Supreme Court.

In late March, the Supreme Court overruled the decision of the Sixth Circuit, ruling that the severance payments at issue in the Quality Stores were taxable wages for FICA purposes. This Supreme Court decision means that new protective claims for refund filings should not be made and that previously filed protective claims for refund will not be granted.

Read the full details of the Supreme Court’s decision here.

If you have any questions regarding how this decision may affect your company, please contact us at 513-483-6699.