Severance Payments Are Taxable Under FICA, Justices Say

Law360, New York (March 25, 2014, 11:18 AM ET) -- Severance payments made to employees terminated against their will are taxable wages under federal law, the U.S. Supreme Court ruled on Tuesday, in a case involving Quality Stores Inc., a bankrupt agricultural specialty retailer.

In a decision that could impact the manner in which future severance payments are made under a bankruptcy, the high court voted 8-0 to overturn a Sixth Circuit opinion that Quality Stores deserves a $1 million tax refund because severance payments to involuntarily terminated workers aren't taxable under the Federal Insurance Contributions...
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