Document ID: ./input/supremecourt_opinions/opinions/13pdf/12-1408_6468.pdf
Page Number: 14

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

11 

Opinion of the Court 

tax  withholding.    Rev.  Rul.  56–249,  1956–1  Cum. Bull. 
488; see Rev. Rul. 58–128, 1958–1 Cum. Bull. 89; Rev. Rul. 
60–330,  1960–2  Cum. Bull.  46;  see  also  IRS  Technical 
Advice Memorandum 9416003, 1993 WL 642695 (Apr. 22,
1994) (hereinafter TAM 9416003). 

Although  the  IRS  exempted  SUBs  paid  to  terminated 
employees  from  withholding  for  income-tax  purposes,  the
payments still were considered taxable income.  Rev. Rul. 
56–249,  1956–1  Cum. Bull.  488.    As  a  result,  terminated 
employees  faced  significant  tax  liability  at  the  end  of 
the  year.  The  Treasury  Department  suggested  Congress 
authorize  the  agency  to  promulgate  regulations  allowing
voluntary  withholding.    Statements  and  Recommenda-
tions  of  the  Department  of  the  Treasury:  Hearings  on 
H. R. 13270 before the Senate Committee on Finance, 91st 
Cong., 1st Sess., 905–906 (1969). 

In  1969,  Congress  chose  instead  to  address  the  with-
holding problem by enacting §3402(o).  It provides that all
severance payments—that is, both SUBs as well as sever-
ance  payments  that  the  IRS  considered  wages—shall  be 
“treated as if ” they were wages for purposes of income-tax 
withholding.  It  is  apparent  that  the  definition  Congress
adopted  in  §3402(o)  is  not  limited  to  the  SUBs  that  the 
IRS  had  deemed  exempt  from  wages  under  FICA.  See 
§3402(o)(2)(A).    It  must  be  presumed  that  Congress  was
aware  that  §3402(o)  covered  more  than  the  severance 
payments  that  were  excluded  from  income-tax  withhold-
ing.  Not  all  severance  payment  plans  were  tied  to  state 
unemployment  benefits;  and,  before  §3402(o)’s  1969  en-
actment,  the  IRS  ruled  that  severance  payments  not 
linked  to  state  unemployment  benefits  were  wages  for 
purposes  of  income-tax  withholding.  See  Rev.  Rul.  65– 
251,  1965–2  Cum. Bull.  395;  see  also  TAM  9416003  (the 
IRS’ original 1956 exception for SUBs provided “a limited 
exception  from  the  definition  of  wages  for  . . .  federal 
income  tax  withholding  . . .  only  if  the  payments  are  de-