Written by: Paul B. Murray

Employers who paid FICA tax on severance pay on a 2010 employment tax return should consider filing a protective refund claim by April 15, 2014, to ensure that they receive a refund of the FICA tax that they paid if the Supreme Court ultimately decides in U.S. v. Quality Stores that severance pay should not be subject to FICA tax.

The Supreme Court has agreed to review a decision by the U.S. Court of Appeals for the Sixth Circuit holding that supplemental unemployment compensation benefit payments—a term which includes severance pay—were not subject to FICA tax. (U.S. v. Quality Stores, (CA 6 09/07/2012))

Protective refund claim strategy: The Supreme Court is not expected to issue a ruling on this matter until sometime in the summer of 2014.

April 15, 2014, is the deadline for filing a protective refund claim on 2010 employment tax returns. The protective claim is filed on Form 941-X, Adjusted Employer’s Quarterly Federal Tax Return or Claim for Refund. Please contact our office if you need assistance in filing this claim.

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