This week the Supreme Court decided the case of US vs. Quality Stores and reversed the 6th Circuit’s holding that severance payments made to terminated employees were not subject to FICA. Quality Stores had brought a case to obtain refunds for both the employer and employee shares of FICA on behalf of itself and some of its terminated employees (terminated as a part of the business going into bankruptcy). The Supreme Court held that severance payments made to terminated employees and not linked to the receipt of state unemployment benefits are considered to be remuneration for employment and are taxable wages under FICA (in line with the fact that they are also subject to income tax withholding).