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Sixth Circuit Court Overruled on Severance Payment Tax Treatment

A Workplace Law Client Alert

By: Bodman's Workplace Law Practice Group


Benjamin Franklin once said that there are only two things certain in life: death and taxes. On Monday, the U.S. Supreme Court in United States v. Quality Stores, Inc., proved the certainty of taxes.  In a unanimous decision, the Supreme Court reversed the Sixth Circuit’s position that severance payments are not subject to FICA tax. 

The IRS has not yet announced whether it will enforce the Supreme Court ruling retroactively against employers who did not withhold FICA tax in reliance on Sixth Circuit precedent.  Continue to monitor future e-alerts for updates on IRS guidance related to Quality Stores.  If you have any questions or concerns, contact a member of Bodman’s Workplace Law Group listed below. 

Bodman PLC Workplace Law Group


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