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IRS juggling many payroll projects

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in Office Management,Payroll Management

The IRS has been busy since the U.S. Supreme Court ruled earlier this year in United States v. Quality Stores that severance pay is FICA taxable. In May, IRS Acting Chief of Employment Tax Dan Lauer addressed the American Payroll Association’s 32nd Annual Congress in Minneapolis, bringing participants up to speed with the goings on at the IRS.

Aftermath of Quality Stores. Lauer said about 12,000 employers filed FICA refund claims after the 6th Circuit ruled that severance pay wasn’t FICA taxable. Now that the Supreme Court has ruled, those claims must be disallowed.

The IRS is trying to figure out the most expeditious way to do that, Lauer said. It has slotted these claims into three buckets of inventory—currently disallowed claims, claims previously disallowed and on appeal, and claims the Department of Justice is actively seeking to dismiss in court. The IRS is contemplating issuing a blanket announcement dismissing these ...(register to read more)

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Roger Marple July 2, 2014 at 9:59 am

I can’t believe severance pay wasn’t FICA taxable before? It should actually be taxed at a higher rate than earned income…it’s unearned income!

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