United States v. Quality Stores, Inc., et al. (572 U.S. 141)
U.S. Supreme Court · decided March 25, 2014 · Supreme Court Database (Spaeth)
- Citation
- 572 U.S. 141 · 134 S. Ct. 1395
- Decided
- March 25, 2014
- Term
- October Term 2013
- Vote
- 8–0
- Majority author
- Justice Kennedy
- Issue area
- Federal Taxation
- Disposition
- Reversed and remanded
- Outcome
- Petitioning party won
- Ideological direction
- Liberal
Opinion excerpt
Justice KENNEDY delivered the opinion of the Court. This case presents the question whether severance payments made to employees terminated against their will are taxable wages under the Federal Insurance Contributions Act (FICA), 26 U.S.C. § 3101 et seq. The Court of Appeals for the Sixth Circuit held that the payments are not wages taxed by FICA. To reach its holding, the Court of Appeals relied not on FICA’s definition of wages but on § 3402(o) of the Internal Revenue Code, a provision governing income-tax withholding. That conclusion, for the reasons to be discussed, was incorrect. FICA’s broad definition of wages includes the severance payments made here. And § 3402(o) does not alter that definition. Section 3402(o) instructs that any severance payment “shall be treated as if it were a payment of wages.” According to the Court of Appeals, § 3402(o) suggests that the definition of wages for income-tax withholding does not extend to severance payments; and so, the argument continues, severance payments also must be beyond the terms of FICA’s similar definition. But § 3402(o) is entirely compatible with the proposition that some or all payments do fall within the broad definition of the term wages. Section 3402(o) was enacted in response to a narrow, specific problem regarding income-tax withholding. In addition, were the Court to rule that the severance payments made here…
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