Ezel / IRS Rulings / 200940026

CCA 200940026: Advice on severance-pay and settlement discussions

Number
200940026
Outcome
Advice
Document type
Chief Counsel Advice
IRS subject
Back Pay
Topics
Employment taxes
Code sections
§ 104
Ruling dated
July 24, 2009
Publicly released
October 2, 2009
Source
View Official PDF

Apply this to your situation

This page covers legal advice the IRS Office of Chief Counsel wrote for IRS staff, issued in 2009, which can't be cited as precedent. Ask about your situation and see what the current Code and IRS guidance say, with citations.

Currency note: this determination was released in 2009
Statutory amendments, regulation changes, court decisions, or later IRS guidance may have changed the analysis since then. Treat this page as historical context, not current tax advice. Verify current law before relying on any specific rule, threshold, or position mentioned here.
Not precedent. Under 26 U.S.C. § 6110(k)(3), this written determination may not be used or cited as precedent. It is advice from the IRS Office of Chief Counsel to IRS personnel on the facts they presented, and identifying details were redacted by the IRS before release. The official IRS release (linked on this page as a PDF) is the authoritative source.
About this page: The plain-English summary and ruling snapshot below were written by Ezel based on the official IRS release. The full text is the IRS's own document.
View official IRS release (PDF)

Plain-English summary

This Chief Counsel Advice discusses whether a document should retain analysis of section 104(a)(2), severance-pay treatment, and federalism or pre-emption. The message questions a citation to Johnson v. United States, 949 F.2d 434, and suggests Commissioner v. Schleier, 515 U.S. 323 (1995), as stronger authority for the proposition that settlement payments are not excludable unless the claim involves a tort or tort-like injury and the damages were received for personal physical injuries or sickness.

Ruling snapshot

  • Question: Which authorities and issues should be retained in a discussion of severance pay and section 104(a)(2)?
  • Outcome: Advice given.
  • Key authorities: IRC § 104(a)(2); Johnson v. United States, 949 F.2d 434; Commissioner v. Schleier, 515 U.S. 323 (1995).

Full text (IRS public release)

ID: CCA-181233-09 Number: 200940026
Release Date: 10/2/2009
Office: -----------------------------
UILC: 3121.01-01

From: -----------
Sent: Friday 7/24/2009 5:10 PM
To: -------------------------
Cc: ----------------------------
Subject:

------

I think you make a good case for leaving the discussion of 104(a)(2) in the document. I think the discussion on the ---- treatment of severance pay is also pertinent. I don't know if the folks in -------------- have anything to add to the discussion of federalism/ pre-emption.

I note that I was unable to find a case that is cited in the document: Johnson v. United States, 949 F.2d

  1. You may want to double check that citation. If you are looking for the best case to cite for the
    proposition that payments in settlement of a claim are not excludable from income under section 104(a)(2) unless: 1) the claim is for a tort or tort-like injury; and 2) the damages were received on account of personal physical injuries or sickness, you may want to cite Commissioner v. Schleier, 515 U.S. 323 (1995) instead - as this is a Supreme Court decision and represents stronger legal authority.

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