{"id":63,"date":"2016-02-15T12:10:40","date_gmt":"2016-02-15T12:10:40","guid":{"rendered":"https:\/\/amerilawyer.wordpress.com\/?p=63"},"modified":"2025-05-27T16:42:28","modified_gmt":"2025-05-27T20:42:28","slug":"taxing-severance-pay","status":"publish","type":"post","link":"https:\/\/www.amerilawyer.com\/blog\/business\/taxing-severance-pay","title":{"rendered":"Taxing Severance Pay"},"content":{"rendered":"<p>Many employers have typically interpreted their <strong>FICA <\/strong>(Federal Insurance Contributions Act)\u00a0obligations (i.e., Social Security and Medicare) to extend to severance pay based on the IRS treating severance pay as wages, but that may change. Employers making severance payments may be entitled to a <a href=\"http:\/\/www.amerilawyer.com\/\" target=\"_blank\">refund<\/a> if the employers withheld FICA.<\/p>\n<p style=\"text-align: left;\"><a href=\"http:\/\/www.amerilawyer.com\" rel=\"attachment wp-att-524\"><img loading=\"lazy\" decoding=\"async\" class=\"alignleft wp-image-524\" src=\"http:\/\/amerilawyer-blog.local\/wp-content\/uploads\/2016\/02\/Severance-Pay.jpg\" alt=\"Severance Pay\" width=\"262\" height=\"138\" srcset=\"https:\/\/www.amerilawyer.com\/blog\/wp-content\/uploads\/2016\/02\/Severance-Pay.jpg 475w, https:\/\/www.amerilawyer.com\/blog\/wp-content\/uploads\/2016\/02\/Severance-Pay-300x158.jpg 300w, https:\/\/www.amerilawyer.com\/blog\/wp-content\/uploads\/2016\/02\/Severance-Pay-144x76.jpg 144w\" sizes=\"auto, (max-width: 262px) 100vw, 262px\" \/><\/a>This year, the U.S. Supreme Court will hear a case regarding whether severance payments should or should not be subject to FICA. In the pending case, the lower court ordered that the IRS give a full refund of <strong>$1,000,125<\/strong> to the employer. The lower court found that payments the employer made to employees who were involuntarily terminated due to business cessation were considered supplement unemployment compensation benefits (SUB payments) that are not taxable wages under FICA.<\/p>\n<p style=\"text-align: left;\">A ruling in favor of the employer would lower costs for employers. <strong>Employers would no longer be required to make FICA contributions on severance payments. Additionally, employers may be entitled to a refund on previous severance payments.<\/strong> Accordingly, employers should consider filing protective refund claims so that they can keep the statute of limitations on refund claims open pending review of the above mentioned case by the U.S. Supreme Court. Employees may also file claims for refunds.<\/p>\n<p><b>If you are a member of Spiegel &amp; Utrera, P.A.\u2019s <\/b><a href=\"http:\/\/www.amerilawyer.com\/general_counsel.htm\"><b>General Counsel Club<\/b><\/a><b> and have questions about Taxing Severance Pay or Filing Protective Refund Claims, call (800) 734-9900 or<\/b><b>clubassist@amerilawyer.com<\/b><b> for assistance. Remember, as a member of the \u00a0General Counsel Club, you receive unlimited legal, business, credit and tax advice all year long.<\/b><\/p>\n<p><em>Spiegel &amp; Utrera, P.A. is a corporate law firm with its main offices located in Miami, Florida with offices throughout the U<\/em><span class=\"text_exposed_show\"><em>nited States. As a law firm, we do more than just help you form your business entity. We stand ready to help with the maintenance of your legal business entity! We\u00a0will assist you with<a href=\"http:\/\/www.amerilawyer.com\/form_a_corporation\/corporation.htm\" target=\"_blank\">Incorporation Service<\/a>, <a href=\"http:\/\/www.amerilawyer.com\/trademark\/index.htm\" target=\"_blank\">Trademarks<\/a>, <a href=\"http:\/\/www.amerilawyer.com\/trademark\/tm_copyright.htm\" target=\"_blank\">Copyrights<\/a>, <a href=\"http:\/\/www.amerilawyer.com\/living_trust.htm\" target=\"_blank\">Estate Planning<\/a>, <a href=\"http:\/\/www.amerilawyer.com\/general_counsel.htm\" target=\"_blank\">Legal Counsel<\/a>, <a href=\"http:\/\/www.amerilawyer.com\/assetprotection\/index.htm\" target=\"_blank\">Wills<\/a>, <a href=\"http:\/\/www.amerilawyer.com\/livingtrusts\/index.htm\" target=\"_blank\">Trusts<\/a>, <a href=\"http:\/\/www.amerilawyer.com\/agreements\/\" target=\"_blank\">Agreements &amp; Leases<\/a>, <a href=\"http:\/\/www.amerilawyer.com\/\" target=\"_blank\">Corporate &amp; Company Changes<\/a>.<\/em><\/span><\/p>\n<p>&nbsp;<\/p>\n","protected":false},"excerpt":{"rendered":null,"protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[3,72,6,7],"tags":[9,11,12,13,24,26,34,37,38,39],"class_list":["post-63","post","type-post","status-publish","format-standard","hentry","category-business","category-entrepreneur","category-legal-services","category-taxes","tag-amerilawyer","tag-attorney","tag-benefits","tag-business","tag-lawyer","tag-legal-services","tag-severance-pay","tag-tax-benefits","tag-tax-season","tag-taxes"],"_links":{"self":[{"href":"https:\/\/www.amerilawyer.com\/blog\/wp-json\/wp\/v2\/posts\/63","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.amerilawyer.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.amerilawyer.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.amerilawyer.com\/blog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.amerilawyer.com\/blog\/wp-json\/wp\/v2\/comments?post=63"}],"version-history":[{"count":1,"href":"https:\/\/www.amerilawyer.com\/blog\/wp-json\/wp\/v2\/posts\/63\/revisions"}],"predecessor-version":[{"id":25375,"href":"https:\/\/www.amerilawyer.com\/blog\/wp-json\/wp\/v2\/posts\/63\/revisions\/25375"}],"wp:attachment":[{"href":"https:\/\/www.amerilawyer.com\/blog\/wp-json\/wp\/v2\/media?parent=63"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.amerilawyer.com\/blog\/wp-json\/wp\/v2\/categories?post=63"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.amerilawyer.com\/blog\/wp-json\/wp\/v2\/tags?post=63"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}