Supreme Court to Decide Severance Pay Case

[silverscreenselect]

It actually surprised me to learn that this issue hasn't been finally decided before now.

The Supreme Court heard arguments this week whether severance pay for laid off workers was subject to Social Security and Medicare taxes as wages. Lower courts have split on the issue. The government has been collecting Social Security and Medicare on these payments, but in the case of a defunct retailer, Quality Stores, the lower court approved the employer's request for a refund. If the refund is upheld by the Supreme Court, the company and many of the laid off employees would receive over $1 million dollars.

A decision in favor of the employer would also mean the government could be on the hook for over $1 billion in other refund claims that have already been filed, plus others that could be filed. Of course, the Supreme Court could decline to make the decision retroactive, meaning Quality would be the only employer to get relief. However, in the future, laid off employees could see larger severance pay packages.

A decision is expected in June.

http://www.reuters.com/article/2014/01/ ... 8Z20140113