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Page Number: 17

14 

UNITED STATES v. QUALITY STORES, INC. 

Opinion of the Court 

portance is the major principle recognized in Rowan: that 
simplicity  of  administration  and  consistency  of  statutory
interpretation instruct that the meaning of “wages” should 
be in general the same for income-tax withholding and for 
FICA calculations. 

Quality  Stores  contends  that,  under  the  mandate  of
§3402(o),  severance  payments  are  not  subject  to  FICA 
taxation  but  are  to  be  deemed  wages  for  purposes  of 
income-tax withholding.  It justifies this differential treat-
ment  in  the  name  of  uniformity.  But  that  so-called  uni-
formity as to the definitions of wages (i.e., that severance 
payments are not wages) is not consistent with the broad
textual  definitions  of  wages  under  FICA  and  income-tax
withholding.  Nor is it consistent with this Court’s holding
that  administrative  reasons  justify  treating  severance
payments  as  taxable  for  both  FICA  and  income-tax  pur-
poses.  To read Congress’ command to withhold severance 
payments as an implicit overruling of the broad definition
of  wages  in  FICA  would  disserve  the  statutory  text  and 
the  congressional  interest  in  administrative  simplicity
deemed controlling in Rowan. 

In  concluding,  the  Court  notes  that  the  IRS  still  pro-
vides that severance payments tied to the receipt of state 
unemployment benefits are exempt not only from income-
tax  withholding  but  also  from  FICA  taxation.    See,  e.g.,
Rev.  Rul.  90–72,  1990–2  Cum. Bull.  211.    Those  Revenue 
Rulings  are  not  at  issue  here.    Because  the  severance 
payments  here  were  not  linked  to  state  unemployment
benefits,  the  Court  does  not  reach  the  question  whether 
the  IRS’  current  exemption  is  consistent  with  the  broad
definition of wages under FICA. 

* 

* 

* 

The  severance  payments  here  were  made  to  employees 
terminated  against  their  will,  were  varied  based  on  job
seniority  and  time  served,  and  were  not  linked  to  the