United States v. Cleveland Indians Baseball Company (532 U.S. 200)
U.S. Supreme Court · decided April 17, 2001 · Supreme Court Database (Spaeth)
- Citation
- 532 U.S. 200 · 121 S. Ct. 1433
- Decided
- April 17, 2001
- Term
- October Term 2000
- Vote
- 9–0
- Majority author
- Justice Ginsburg
- Issue area
- Federal Taxation
- Disposition
- Reversed
- Outcome
- Petitioning party won
- Ideological direction
- Liberal
Opinion excerpt
Justice Ginsburg delivered the opinion of the Court. The Federal Insurance Contributions Act (FICA) and the Federal Unemployment Tax Act (FUTA) impose excise taxes on employee wages to fund Social Security, Medicare, and unemployment compensation programs. This case concerns the application of FICA and FUTA taxes to payments of back wages. The Internal Revenue Service has consistently maintained that, for tax purposes, backpay awards should be attributed to the year the award is actually paid. Respondent Cleveland Indians Baseball Company (Company) urges, and the Court of Appeals for the Sixth Circuit held, that such awards must be allocated, as they are for purposes of Social Security benefits eligibility, to the periods in which the wages should have been paid. According due respect to the Service’s reasonable, longstanding construction of the governing statutes and its own regulations, we hold that back wages are subject to FICA and FUTA taxes by reference to the year the wages are in fact paid. I Pursuant to a settlement of grievances asserted by the Major League Baseball Players Association concerning players’ free agency rights, several Major League Baseball clubs agreed to pay $280 million to players with valid claims for salary damages. Under the agreement, the Company owed 8 players a total of $610,000 in salary damages for 1986, and it owed 14 players a total of…
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