Document ID: ./input/supremecourt_opinions/opinions/13pdf/12-1408_6468.pdf
Page Number: 6

Cite as:  572 U. S. ____ (2014) 

3 

Opinion of the Court 

and  12  months  of  severance  pay,  and  full-time  employees
and  employees  paid  by  the  hour  received  one  week  of
severance  pay  for  every  year  of  service  if  the  employees 
had  been  employed  for  at  least  two  years,  up  to  a  stated 
maximum  of  severance  pay.  Workers  who  had  been  em-
ployed  for  less  than  two  years  received  a  week  of  sever-
ance pay.

Quality  Stores  reported  the  severance  payments  as
wages  on  W–2  tax  forms,  paid  the  employer’s  required 
share  of  FICA  taxes,  and  withheld  employees’  share  of 
FICA  taxes.    Then  Quality  Stores  asked  3,100  former 
employees  to  allow  it  to  file  FICA  tax  refund  claims  for 
them.  About 1,850 former employees agreed to allow Qual-
ity Stores to pursue FICA refunds.  On its own behalf and 
on behalf of the former employees, Quality Stores filed for 
a refund of $1,000,125 in FICA taxes.  The Internal Reve-
nue Service neither allowed nor denied the claim. 

Quality Stores initiated a proceeding in the Bankruptcy
Court  seeking  a  refund  of  the  disputed  amount.    The 
Bankruptcy  Court  granted  summary  judgment  in  its 
favor.  The  District  Court  and  Court  of  Appeals  for  the 
Sixth  Circuit  affirmed,  concluding  that  severance  pay-
ments  are  not  “wages”  under  FICA.  See  In re  Quality 
Stores,  Inc.,  693  F. 3d  605  (2012).    Other  Courts  of  Ap-
peals,  however,  have  concluded  that  at  least  some  sever-
ance  payments  do  constitute  wages  subject  to  FICA  tax.
See, e.g., CSX Corp. v. United States, 518 F. 3d 1328 (CA 
Fed.  2008);  University  of  Pittsburgh  v.  United  States,  507 
F. 3d 165 (CA3 2007); North Dakota State Univ. v. United 
States,  255  F. 3d  599  (CA8  2001).    The  United  States, 
claiming  that  the  FICA  taxes  must  be  withheld,  sought 
review  here;  and  certiorari  was  granted,  570  U. S.  ___
(2013).