On March 25, 2014, the Supreme Court issued its decision in United States v. Quality Stores. The question in this case is whether severance payments made to employees whose employment was involuntarily terminated are taxable under the Federal Insurance Contributions Act (“FICA”), 26 U.S.C. 3101 et seq.
In an 8-0 opinion delivered by Justice Kennedy, the Court held that severance payments to employees who are involuntarily terminated are taxable wages for purposes of the Federal Insurance Contributions Act. The judgment of the Sixth circuit was reversed and remanded. Every justice joined Justice Kennedy’s opinion except for Justice Kagan, who took no part in the consideration or decision of the case.
To discuss the case, we have Kristin Hickman, Harlan Albert Rogers Professor in Law; Associate Director, Corporate Institute at the University of Minnesota Law School.