ERIC Files Amicus Brief in United States v. Quality Stores before U.S. Supreme Court

ERIC has filed with the U.S. Supreme Court an amicus brief in the United States v. Quality Stores case, which concerns the issue of whether supplemental unemployment benefits (“SUB payments”), such as severance pay, termination benefits, or plant shutdown benefits, are subject to FICA taxes. The brief was prepared by Covington & Burling LLP.

Although the Sixth Circuit in the Quality Stores case ruled that FICA taxes did not apply, the IRS (U.S. government) appealed the decision. The government’s position would result in different FICA tax treatment for individuals in different states even if they were covered by the same plan from the same employer, a result that seems unlikely to have been intended by Congress.

The issues addressed in the case and the brief focus on statutory construction issues. The Sixth Circuit determined and the ERIC amicus brief argues that SUB payments in general are not considered wages for FICA tax purposes as long as such payments meet the statutory definition (although they are subject to income tax and income tax withholding). This is based on a clear and consistent reading of the relevant income and FICA tax provisions.

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