December 2012

Tax & Business Planning and
Employee Benefits & Executive Compensation Alert:

Court Holds Severance Payments Not Subject to FICA Taxes; Refund Claims Should Be Filed Soon

In this issue, we address tax planning opportunities resulting from the recent Federal Court of Appeals decision in U.S. v. Quality Stores, Inc., No. 10-1563 (6th Cir., 9/7/2012). This landmark case potentially impacts both workers that have been laid off and businesses that have had to downsize. In Quality Stores, the court held that certain severance payments should not be subject to FICA employment taxes. This decision resulted in a refund of over $1 million to Quality Stores and its employees. Although this case is being appealed by the government, there are important steps that need to be taken soon to preserve the right to potentially receive a refund of FICA taxes paid in similar situations.

To learn more about this landmark pro-taxpayer case as well as potential planning opportunities and to view the entire edition of our Tax and Business Planning e-Alert, click here.

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