In Light Of US V. Quality Stores, Let's Look At SUB-Pay

Law360, New York (April 25, 2014, 1:04 PM EDT) -- The decade-long debate over whether or not severance paid to certain employees is considered wages for Federal Income Contributions Act tax purposes is over. On March 25, 2014, the U.S. Supreme Court ruled in favor of the Internal Revenue Service in United States v. Quality Stores Inc., deciding that severance payments employers made to involuntarily laid-off employees are “wages” and are taxable under FICA.

The court based its decision on an analysis of (1) the definition of “wages” in FICA — a statute that taxes “wages”...
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