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Page Number: 11

8 

UNITED STATES v. QUALITY STORES, INC. 

Opinion of the Court 

income-tax  withholding  is  an  indirect  means  of  stating 
that  the  definition  of  wages  for  income-tax  withholding 
does  not  cover  severance  payments.    It  contends,  further, 
that  if  the  definition  of  wages  for  purposes  of  income-tax 
withholding does not encompass severance payments, then 
severance  payments  are  not  covered  by  FICA’s  similar 
definition of wages. 

The  Court  disagrees  that  §3402(o)  should  be  read  as
Quality  Stores  suggests.    The  chapter  governing  income-
tax withholding has a broad definition of the term “wages”:
“all  remuneration  . . .  for  services  performed  by  an  em-
ployee  for  his  employer,  including  the  cash  value  of  all 
remuneration  (including  benefits)  paid  in  any  medium
other  than  cash.”    §3401(a).    The  definitional  section  for 
income-tax  withholding,  like  the  definitional  section  for
FICA,  contains  a  series  of  specific  exemptions  that  rein-
force the broad scope of its definition of wages.  The provi-
sion  exempts  from  wages,  for  example,  any  remuneration
paid  for  domestic  service  in  a  private  home,  for  services
rendered  to  a  foreign  government,  and  for  services  per-
formed  by  a  minister  of  a  church  in  the  course  of  his  du-
ties.  §§3401(a)(3),  (5),  (9).  Severance  payments  are  not 
exempted, and they squarely fall within the broad textual 
definition of wages for purposes of income-tax withholding 
under §3401(a), for the same reasons outlined above with
respect to FICA’s similar definition of wages. 

Quality  Stores  contends  that,  the  broad  wording  of  the 
definition in §3401(a) aside, severance payments must fall 
outside the definition of wages for income-tax withholding.
Otherwise, it argues, §3402(o) would be superfluous.  But, 
as  the  Government  points  out,  §3402(o)’s  command  that
all severance payments be treated “as if ” they were wages
for  income-tax  withholding  is  in  all  respects  consistent
with  the  proposition  that  at  least  some  severance  pay-
ments are wages.  As the Federal Circuit explained when 
construing  §3402(o),  the  statement  that  “all  men  shall  be