Employee Benefits & Executive Compensation Blog

The View from Proskauer on Developments in the World of Employee Benefits, Executive Compensation & ERISA Litigation

Category Archives: Taxable Wages

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IRS Confirms California “Waiting Time Penalties” Are Not Wages For Federal Income Tax Purposes

A recent IRS information letter confirms that “waiting time penalties” paid under California law are not wages for federal income tax withholding purposes. Section 203 of the California State Labor Code imposes penalties on employers that fail to pay final wages to terminated employees within a specified period of time. These penalties are paid to … Continue Reading

Sixth Circuit Will Not Rehear Quality Stores Decision that Severance Pay in Connection with a Reduction in Force is not Subject to FICA; Supreme Court Next Step?

On September 7, 2012, the Sixth Circuit Court of Appeals held in United States v. Quality Stores, Inc. that severance payments to former employees pursuant to an involuntary reduction in force are not taxable “wages” for purposes of Social Security and Medicare withholding under the Federal Insurance Contributions Act, or FICA. The decision is significant … Continue Reading
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