Severance Wages

IRS Announces That It Will No Longer Refund FICA Taxes on Severance Payments

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The IRS recently announced that severance payments are taxable wages under FICA, and thus employers who seek tax refunds on those payments will be denied.  The IRS’s position reflects the United States Supreme Court’s ruling in United States v. Quality Stores, Inc., issued in March of last year.

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