The New Jersey Supreme Court, in In re: Princeton Office Park, L.P. v. Plymouth Park Tax Services, LLC, determined that under the Tax Sale Law, N.J.S.A. §§ 54:5-1 to -137, a purchaser of a tax sale certificate acquires a tax lien, not a lien securing the property owner's obligation to pay the amount owing to redeem the certificate.
Q: When is a retirement account not a retirement account?
A: When it's an inherited IRA and the owner is bankrupt.
Within one day of each other, the U.S. District Court for the District of Massachusetts (“District Court”) in Perkins v. Massachusetts Department of Revenue, 507 B.R. 45 (Mar. 7 2014), and the Bankruptcy Appellate Court for the First Circuit (“BAC”) in Gonzalez v. Massachusetts Department of Revenue, 506 B.R. 317 (Mar. 6, 2014), issued contrary appellate rulings as to whether tax liabilities in late-filed state tax returns are dis-chargeable under Chapter 7.
Can a foreign person exclude foreign-situs assets in determining insolvency exception to cancellation of indebtedness income?
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).
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.
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.
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).
A new decision in Ash v. North American Title Co. holds that (1) contract damages based upon a bankruptcy were not foreseeable, and (2) an escrow holder was entitled to a jury instruction as to intervening or superceding causes (i.e., the bankruptcy). The decision also highlights a potential for some judges to try to impose greater responsibilities on escrow holders.
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.