Employment Tax Refund - February 2004

Recently, the United States Court of Federal Claims issued its opinion in CSX Corp. case regarding Federal Insurance Contribution Act (FICA) and unemployment tax.  It held that payments a company makes to involuntary terminated employees under a reduction-in-force plan are supplemental unemployment compensation benefits and thus not "wages" for purposes of Social Security, Medicare and unemployment taxes.

As a result of this new development, some companies may be due a refund of Social Security, Medicare and unemployment taxes that were paid on severance payments to separated employees following a layoff or termination.

Eligibility
For a company to be eligible, it must have paid severance benefits to employees under an established reduction-in-force plan.   The time frame to amend payroll tax returns is limited to three years only therefore, it is important to act quickly before expiration of this period. 

Process
Review your company payroll records to determine the amount of potential supplemental unemployment compensation benefits paid.   Contact us so we can make the necessary computations, assemble the needed documentation and file the required amended payroll tax returns.

To contact Feeley & Driscoll, please click here or call us at 1 (888) 875-9770.