Payroll taxes on severance pay
United States v. Quality Stores
In brief
Severance payments in this case count as FICA wages, and the Supreme Court overturned the Sixth Circuit's contrary ruling.
- Where it stands
- Decided
Decided 8-0 · March 25, 2014 · Opinion by Justice Kennedy
- What it’s about
- The dispute was whether severance pay to employees Quality Stores laid off counted as wages subject to federal Social Security and Medicare payroll taxes (FICA).
- Who it affects
- Quality Stores' severance payments at issue are subject to federal payroll taxes as FICA wages.
Summary: written with AI from the case record.
What it's about
The Supreme Court ruled that it did, overturned the Sixth Circuit, and sent the case back to that court (remanded).
FICA is the federal law behind Social Security and Medicare payroll taxes.
Question presented
Are severance payments for employees who were involuntarily terminated taxable under the Federal Insurance Contributions Act?
What the Court decided
Holding
The severance payments at issue are taxable wages for FICA purposes. 693 F. 3d 605, reversed and remanded.
- Result
- Reversed
The vote
What's next
The case returns to the Sixth Circuit, which must proceed under the Supreme Court's ruling that these payments are FICA wages.
Documents
Opinions
Docket activity
New analysis added
AI analysis generated: Case Briefing
New analysis added
AI analysis generated: Impact Analysis
AI analysis generated: Opinion Summary
Show 7 moreShow fewer
AI analysis generated: Decision Record
New analysis added
New analysis added
New analysis added
Case data updated: summary, question_presented, generation_metadata
Case data updated: question_presented, extraction_metadata
Opinion added: Quality Stores
Sources
Primary materials plus reporting. Best-effort analysis: this explainer relies on a mix of primary materials and trusted secondary sources. Official filings and opinions remain authoritative.