Supreme Court to Decide Case on Severance Pay and FICA Tax

The U.S. Supreme Court on October 1 agreed to review in its upcoming term a decision by the U.S. Court of Appeals for the Sixth Circuit in United States v. Quality Stores, Inc. that held that certain severance payments that qualify as supplemental unemployment compensation benefit payments are not subject to tax under the Federal Insurance Contributions Act (FICA).

The Sixth Circuit decision created a split with an earlier ruling by the U.S. Court of Appeals for the Federal Circuit in CSX Corp. v. United States that ruled in favor of the government.The Quality Stores case stems from a February 2010 ruling by the U.S. District Court for the Western District of Michigan upholding a bankruptcy court ruling that determined that payments the company made to employees as part of a severance program for involuntary terminations were not subject to tax under FICA.

ERIC members and trial members can read more here.
The Supreme Court Docket Order is available here.
The 6th Circuit Court of Appeals decision is available here.
ERIC's Amicus Brief is available here.