Ezel / IRS Rulings / 201024048

CCA 201024048: Advice notes conflicting decisions on FICA treatment of severance pay

Number
201024048
Outcome
Advice
Document type
Chief Counsel Advice
IRS subject
Wages
Topics
Employment taxes
Code sections
§ 3121
Ruling dated
April 6, 2010
Publicly released
June 18, 2010
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 2010, 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 2010
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

The Office of Chief Counsel discussed the FICA treatment of severance payments under IRC § 3121. The advice notes that the Western District of Michigan held that certain severance payments were excluded from FICA tax in Quality Stores, Inc. v. United States. It also notes that this result conflicted with the Federal Circuit's 2008 decision in CSX Corp. v. United States, which held that severance payments are subject to FICA tax unless they meet the narrow administrative exclusion for SUB-pay in Rev. Rul. 90-72. The advice states that the district court decision was not binding precedent.

Ruling snapshot

  • Question: How should the conflicting court decisions on FICA treatment of severance payments be understood?
  • Outcome: Advice given
  • Key authorities: IRC § 3121; Quality Stores, Inc. v. United States; CSX Corp. v. United States; Rev. Rul. 90-72

Full text (IRS public release)

ID: CCA-461459-10 Number: 201024048
Release Date: 6/18/2010
Office: -----------------------------
UILC: 3121.01-00

From: ---------------
Sent: Tuesday, April 06, 2010 2:54 PM
To: ------------------------------------------------------------------------------------- Cc: ---------------------- Subject: RE: FICA Protective Claims - Severance Pay -

Just heard back from my contact. Modified your statement as follows

Recently, the District Court for the Western District of Michigan issued an opinion in Quality Stores, Inc., et al. v. United States - 2010 WL 679136 (W.D.Mich. Feb 23, 2010) that certain severance payments were excluded from FICA tax. The district court's opinion runs counter to the Federal Circuit Court of Appeal's 2008 decision in CSX Corp. v. United States that held that severance payments are subject to FICA tax unless they meet the narrow administrative exclusion for SUB-pay in Rev. Rul. 90-72. ----------------------------------------------------------------
-----------------------------. The decision is not binding precedent.

What does the Code say today, for your facts?

This advice was written for IRS staff and cannot be cited. Ezel checks the current Internal Revenue Code and IRS guidance against your situation, with citations.

Opens in Ezel Pro.

  • Checks the law as it stands today, not only this page
  • Cites every source it relies on, so you can verify it
  • Chat, drafting and research in one workspace