
The Court made a distinction between "wages" for federal income tax withholding and "wages" for FICA purposes. Because the SUB Payments were not "wages" for FICA purposes, the Court concluded that FICA was not due on the severance payments.
Although this 6th Circuit decision is appealable to the U.S. Supreme Court, the IRS has yet to indicate its intended course of action with respect to severance payments. Taxpayers that have paid FICA on severance payments should consider filing protective claims for refund. FICA tax refund claims must be filed by the later of:
- 3 years from the date Form 941 was filed, or
- 2 years from the date the tax reported on Form 941 was paid.
The unpublished opinion in In re Quality Stores, Inc., (6th Cir. Sept. 10, 2012) can be found by clicking HERE.
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