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Severance payments may not be subject to FICA
  • Masuda Funai Eifert & Mitchell Ltd
  • USA
  • April 13 2010

Recently, the U.S. District Court for the Western District of Michigan affirmed a Bankruptcy Court’s decision and held that severance payments made to employees due to the employees’ involuntary separation from employment that resulted directly from a reduction in force or the discontinuation of a plant or operation are not wages and are therefore not subject to FICA taxation.

Opportunity for FICA savings on severance
  • Stinson Leonard Street LLP
  • USA
  • March 31 2010

A recent US District Court case for the Western District of Michigan may give employers authority to file for refund claims of FICA (Social Security) taxes on severance pay and to avoid FICA taxation on future severance pay.

New decision supports FICA exclusion for severance paid in RIF or plant closing
  • Hogan Lovells
  • USA
  • February 28 2010

A recent decision provides new support for excluding a broad range of severance pay from FICA taxesa position undercut by the taxpayer’s loss in CSX Corp. v. United States, 518 F.3d 1328 (Fed. Cir. 2008).