Compensation & Benefits Alert - February 2014
Employers who reported severance pay as FICA wages on 2010 employment tax returns have until April 15, 2014, to file a protective claim for refund. This action will ensure the employer will not lose its ability to claim a FICA tax refund for 2010 before the Supreme Court decides the issue in the pending case of United States v. Quality Stores. A protective claim is filed on Form 941-X, Adjusted Employer's Quarterly Federal Tax Return or Claim for Refund, and can easily be completed within a short period of time because the actual data on the wages and taxes paid are not required and standardized language claiming an estimated refund can be used. If Quality Stores is resolved in favor of the taxpayers, an employer would perfect the protective claim by furnishing the actual payroll data including the amounts of severance paid, along with employee consents to have their FICA wages adjusted and taxes refunded.