Legal Alert - Sixth Circuit Holds that Severance Payments Are Not Subject to FICA Taxes
November 15, 2012
by Marvin S. (Bucky) Swift, Jr. and Kevin J. Hogan
In United States v. Quality Stores, Inc., et al., the United States Court of Appeals for the Sixth Circuit recently held that severance payments qualified as supplemental unemployment compensation benefit (SUB) payments and were not taxable as wages under the Federal Insurance Contributions Act (FICA). This decision is contrary to the IRS’s long-standing position that most employer-provided severance payments are subject to FICA withholding.
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