The Supreme Court issued an opinion today in United States v. Quality Stores.  The Court reversed the Sixth Circuit and held that certain severance payments for involuntary termination are "wages" subject to FICA tax.  The Court based its holding on the "plain meaning" of the broad statutory definition of wages, and the absence of any applicable exemption.  The Court rejected the taxpayer’s argument that the severance payments are not wages because they are covered by IRC section 3402(o), which provides that certain payments, including the kind of payments at issue, are to be treated "as if" they were wages for income-tax withholding purposes.

The opinion can be accessed via: QualityStores.pdf