Some people head to the beach for Spring Break. I head to Philadelphia. An extended school break for my kids provides a good opportunity to visit my family. Plus, we have had a German daughter in our house since August (a 10th grade exchange student), and we promised her that we’d show her some good old fashioned American history.
In walking around Old City, is becomes very apparent that Philly is Ben Franklin’s city.
Among Franklin’s pithy quotes, his most memorable might be, “In this world nothing can be said to be certain, except death and taxes.”
Last week, the U.S. Supreme Court reminded us of this fact in United States v. Quality Stores [pdf]. The issue in the case was whether severance payments made by an employer to an employee are “wages” for purposes of FICA’s payroll tax. The Court unanimously ruled that severance payments are “wages” subject to FICA, reversing the 6th Circuit. IF you are looking for a more detailed analysis of the Court’s reasoning, head over to SCOTUSblog.
This decision seems to be common sense. If, however, you had previously been following the reversed ruling of the 6th Circuit, you need to change your practices and start withholding FICA’s payroll taxes from the severance payments you make to employees. There are lots of radars on which you, as an employer, do not want to appear. As certain as Mr. Franklin was about death and taxes, I am certain that the IRS’s radar tops that list.