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    From the top
    2015-02-03

    In its first bankruptcy decision of 2014 (October Term, 2013), the U.S. Supreme Court held on March 4, 2014, in Law v. Siegel, 134 S. Ct. 1188 (2014), that a bankruptcy court cannot impose a surcharge on exempt property due to a chapter 7 debtor’s misconduct. In reversing a ruling by the Ninth Circuit, Law v. Siegel (In re Law), 2011 BL 148411 (9th Cir. June 6, 2011), cert. granted, 133 S. Ct.

    Filed under:
    USA, Insolvency & Restructuring, Litigation, Jones Day, Federal Insurance Contributions Act tax, United States bankruptcy court
    Location:
    USA
    Firm:
    Jones Day
    Supreme Court holds severance payments are subject to FICA taxes
    2014-04-30

    Reversing a decision by the Sixth Circuit Court of Appeals, the U.S. Supreme Court ruled unanimously that severance payments to employees who were involuntarily terminated as part of a Chapter 11 bankruptcy were taxable wages subject to Social Security and Medicare (FICA) taxes. The decision disappointed many who had hoped the court would uphold the earlier appeals court ruling that certain severance payments should be exempt from FICA taxes as supplemental unemployment compensation benefits (SUBs).

    Filed under:
    USA, Employment & Labor, Insolvency & Restructuring, Litigation, Tax, Hodgson Russ LLP, Wage, Bankruptcy, Unemployment benefits, Federal Insurance Contributions Act tax, Severance package, Sixth Circuit
    Authors:
    Peter K. Bradley , Anita Costello Greer , Michael J. Flanagan , Richard W. Kaiser , Arthur A. Marrapese III , Ryan M. Murphy
    Location:
    USA
    Firm:
    Hodgson Russ LLP
    U.S. Supreme Court subjects certain employment termination payments to FICA tax
    2014-04-08

    Hopes that certain severance payments paid by companies to terminated employees could escape application of the Federal Insurance Contributions Act (FICA) tax were dashed when a unanimous U.S. Supreme Court ruled on March 25th that such payments, when not tied to state unemployment benefits, were “wages,” and thus taxable. The ruling for the government will allow the IRS to disallow protective refund claims that numerous companies filed after a federal circuit court held that termination payments were not subject to FICA tax.

    Filed under:
    USA, Insolvency & Restructuring, Litigation, Tax, Greenberg Traurig LLP, Wage, Unemployment benefits, Federal Insurance Contributions Act tax, Severance package
    Authors:
    G. Michelle Ferreira , Scott E. Fink , Courtney A. Hopley
    Location:
    USA
    Firm:
    Greenberg Traurig LLP
    From the top in brief - March/April 2014
    2014-03-31

    In its first bankruptcy decision of 2014 (October Term, 2013), the U.S. Supreme Court held on March 4, 2014, in Law v. Siegel, No. 12-5196 (Mar. 4, 2014) (available athttp://www.supremecourt.gov/opinions/13pdf/12-5196_8mjp.pdf), that a bankruptcy court cannot impose a surcharge on exempt property due to a chapter 7 debtor's misconduct, acknowledging that the Supreme Court's decision may create "inequitable results" for trustees and creditors.

    Filed under:
    USA, Insolvency & Restructuring, Litigation, Jones Day, Bankruptcy, Debtor, Federal Insurance Contributions Act tax, United States bankruptcy court, Third Circuit
    Authors:
    Mark G. Douglas
    Location:
    USA
    Firm:
    Jones Day
    Supreme Court decides United States v. Quality Stores, Inc.
    2014-03-25

    On March 24, 2014, the U.S. Supreme Court issued its decision in United States v. Quality Stores, Inc.,No. 12-1408, holding that severance payments made to employees terminated in connection with a company's Chapter 11 bankruptcy plan are taxable wages under the Federal Insurance Contributions Act (FICA).

    Filed under:
    USA, Employment & Labor, Insolvency & Restructuring, Litigation, Tax, Faegre Baker Daniels LLP, Federal Insurance Contributions Act tax
    Authors:
    Bruce Jones , Trina K. Taylor
    Location:
    USA
    Firm:
    Faegre Baker Daniels LLP
    Severance payments are FICA wages
    2014-03-25

    This morning the US Supreme Court issued a ruling providing that severance payments are taxable FICA wages. In United States vs. Quality Stores, Quality Stores made severance payments to employees who were involuntarily terminated as part of Quality Stores’ Chapter 11 bankruptcy. Quality Stores paid and withheld income and FICA taxes from the severance payments. Later, Quality Stores sought a refund on behalf of itself and former employees for FICA taxes withheld and paid.

    Filed under:
    USA, Employment & Labor, Insolvency & Restructuring, Litigation, Tax, Kilpatrick Townsend & Stockton LLP, Wage, Federal Insurance Contributions Act tax, Severance package, Supreme Court of the United States
    Authors:
    Mark L. Stember
    Location:
    USA
    Firm:
    Kilpatrick Townsend & Stockton LLP
    Employers must file protective claims for refund by April 15, 2014 for FICA tax paid on severance pay
    2014-02-25

    Sometime this summer, the Supreme Court is expected to issue its ruling in U.S. v. Quality Stores.  In this case, the Supreme Court reviewed the Sixth Circuit’s holding that supplemental unemployment compensation benefits (“SUB payments”) relating to severance payments are not subject to FICA taxes. U.S. v. Quality Stores, 693 F.3d 605 (6th Cir. 2012).  The Sixth Circuit decision resurrects a long-disputed issue regarding the applicability of FICA to severance pay.

    Filed under:
    USA, Employment & Labor, Insolvency & Restructuring, Litigation, Tax, Kilpatrick Townsend & Stockton LLP, Unemployment benefits, Federal Insurance Contributions Act tax, Severance package, United States bankruptcy court, Sixth Circuit
    Authors:
    Charles E. Hodges II , Susan S. Hu
    Location:
    USA
    Firm:
    Kilpatrick Townsend & Stockton LLP
    The Inbox: January 10, 2014
    2014-01-10

    Neither snow nor rain nor heat nor gloom of night – and certainly not a batch of freezing rain and ice that’s currently paralyzing the greater Baltimore-Washington area right now – stays your trusty editors from the swift completion of their appointed rounds; namely, bringing you the weekly roundup of 

    Filed under:
    USA, Capital Markets, Employment & Labor, Insolvency & Restructuring, Litigation, Zuckerman Spaeder LLP, Cannabis, Federal Insurance Contributions Act tax
    Authors:
    P. Andrew Torrez
    Location:
    USA
    Firm:
    Zuckerman Spaeder LLP
    Sixth Circuit holds that severance pay is not subject to FICA taxes
    2012-10-10

    A few weeks ago, the Sixth Circuit affirmed the Western District Court of Michigan’s holding in U.S. v. Quality Stores Inc., 424 B.R. 237 (W.D. Mich. 2010), that severance payments made to employees pursuant to an involuntary reduction in force were not “wages” for Federal Insurance Contribution Act (“FICA”) tax purposes. U.S. v. Quality Stores Inc., No. 10-1563 (6th Cir. 2012). The Sixth Circuit’s decision creates a circuit court split with the Federal Circuit and its 2008 decision in CSX Corporation v. United States, 518 F.3d 1328 (Fed. Cir. 2008).

    Filed under:
    USA, Employment & Labor, Insolvency & Restructuring, Litigation, Tax, Winston & Strawn LLP, Wage, Unemployment benefits, Federal Insurance Contributions Act tax, Severance package, Sixth Circuit
    Location:
    USA
    Firm:
    Winston & Strawn LLP
    Sixth Circuit says severance payments not subject to FICA
    2012-10-08

    Summary

    Filed under:
    USA, Employment & Labor, Insolvency & Restructuring, Litigation, Tax, Ulmer & Berne LLP, Unemployment benefits, Federal Insurance Contributions Act tax, Severance package, Internal Revenue Service (USA), Sixth Circuit
    Authors:
    John C. Goheen , Patricia A. Shlonsky , Michael T. Tangry
    Location:
    USA
    Firm:
    Ulmer & Berne LLP

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