6th Circuit Decision Offers Potential FICA Savings To Employers

In In re Quality Stores, Inc. (No. 10-1563), the U.S. Court of Appeals for the Sixth Circuit held that payments Quality Stores made to its employees upon terminating their employment involuntarily due to business cessation constituted supplemental unemployment compensation benefits (SUB payments) that are not taxable as wages under FICA. The decision potentially offers employers in Michigan, Tennessee, Ohio, and Kentucky (and perhaps other states) the opportunity to file for a refund of FICA taxes paid in qualifying circumstances.