Ezel / IRS Rulings / 1024048
Chief Counsel Advice 1024048 Released June 18, 2010 Advice

CCA 1024048: Advice notes conflicting decisions on FICA treatment of severance pay

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This page covers one taxpayer's ruling from 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 resolved one taxpayer's situation on its specific facts, 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 The advice states that the district court decision was not binding precedent.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.

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