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File 2010 severance pay FICA protective refund claims by April 15

January 23, 2014

Employers who paid FICA tax on severance pay on a 2010 employment tax return should consider filing a protective refund claimby April 15, 2014,to ensure that they receive a refund of the FICA tax that they paid if the Supreme Court ultimately decides inU.S. v. Quality Storesthat severance pay should not be subject to FICA tax.

Background.The Supreme Court has agreed to review a decision by the U.S. Court of Appeals for the Sixth Circuit holding that supplemental unemployment compensation benefit payments—a term which includes severance pay—were not subject to FICA tax.(U.S. v. Quality Stores, (CA 6 09/07/2012) 110 AFTR 2d 2012-5827, cert granted 10/01/2013; see Weekly Alert ¶  6  10/03/2013.)

Protective refund claim strategy.The Supreme Court is not expected to issue a ruling on this matter until some time in the summer.

April 15, 2014, is the deadline for filing a protective refund claim on 2010 employment tax returns.The protective claim is filed on Form 941-X, Adjusted Employer’s Quarterly Federal Tax Return or Claim for Refund.