Tag Archives: FICA

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

In an 8-0 decision[1] 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 withholding Federal Insurance Contributions Act (“FICA”) taxes, i.e., Social Security and Medicare.  This decision resolves a circuit split created … Continue Reading

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.  The justices, in an 8-0 vote, overturned the Sixth Circuit’s opinion in Quality Stores, Inc., which had held that severance pay made in connection … Continue Reading
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