Opinion ID: 773854
Heading Depth: 2
Heading Rank: 3

Heading: Deputy Tax Collector Defense

Text: 26 Finally, NDSU argues that to the extent any of the payments are subject to FICA tax, it is protected by the deputy tax collector defense, which protects an employer from liability for failing to withhold employment taxes from its employees when the employer lacks precise and not speculative notice of its duty to withhold. See Cent. Ill., 435 U.S. at 31 (noting that the employer is in a secondary position as to liability for any tax of the employee). The defense applies only to that portion of the FICA tax required to be withheld from the employee; it does not apply to the employer's primary obligation to pay its portion of the FICA tax. See, e.g., H B & R, Inc. v. United States, 229 F.3d 688, 692 (8th Cir. 2000) (reversing district court's judgment against the employer for taxes required to be withheld from the employee's wages, but not for FICA taxes the employer was required to pay, based on Central Illinois). 27 The district court found that payments to the administrators were subject to FICA taxation because the administrators were at-will employees and the payments were based on factors traditionally associated with compensation. (See Dist. Ct. Order, Add. at 10-12). NDSU does not appeal this decision, other than to argue that some of the administrators were additionally protected by tenure rights and thus should be treated similarly to the tenured professors rather than the other at-will administrators. Because we have rejected this argument as lacking any factual basis in the record, we treat all of the administrators as at-will employees subject to extended notice rights, as did the district court. 28 NDSU withheld FICA taxes from all payments under the Early Retirement Program prior to 1991, when some participants questioned the practice. As discussed previously, FICA withholding is required for all wages paid to employees, and is broadly construed. The Supreme Court established in 1946 that the term wages includes the whole employer-employee relationship and is not limited to work actually performed. See Nierotko, 327 U.S. at 365-66. As discussed above, the IRS issued Revenue Ruling 75-44 in 1975, requiring RRTA withholding for payments made to an at-will railroad employee who received payments in exchange for his seniority rights. See 1975-1 C.B. 15. NDSU's only basis for arguing that its duty to withhold was not clear is that the administrators were paid under the same program as the tenured faculty, who had clear contractual and constitutional rights not to be terminated at all. This point establishes a significant distinction between the two groups of employees and does not support NDSU's decision to stop withholding from payments to the administrators. Additionally, NDSU's reliance on the letter received from the SSA does not further its decision to stop withholding from payments made to the administrators. NDSU requested information from SSA regarding its tenure buy-out program, not regarding the administrators who also participated in the program. NDSU's obligation to withhold FICA taxes from payments made to at-will administrators, subject only to extended notice prior to termination, was clear in 1991. NDSU is liable for its failure to withhold FICA taxes from payments made to the administrators for the periods between 1991 and 1995, when it did not withhold the taxes.