Supreme Court Reaffirms the Definition of Wages
The United States Supreme Court issued a decision today in US v. Quality Stores, confirming that severance payments made to involuntarily terminated employees are “wages” and subject to taxation under FICA. In reaching this decision, the Court relied on the “broad” definition of wages as including “all remuneration for employment, including the cash value of all remuneration (including benefits) paid in any medium other than cash.” The Court found that severance pay is a benefit of a and remuneration for employment to employees. Employers should keep this broad definition in mind in determining whether any benefit of employment that an employee receives is taxable under FICA.
