Termination payments not exempt from Social Security tax.(PAYROLL TAXES)(Brief Article)

The term "severance pay" is often misunderstood. Here is a helpful overview of the issues employers should be familiar with.

For years the IRS has insisted companies collect and pay Social Security, Medicare and unemployment taxes on all severance payments they made to former employees after a layoff or termination. About 13 years ago, CSX Corp. challenged this established practice and IRS interpretations. The company had been withholding and paying ......

Employers who paid payroll taxes on terminated employees' severance pay may be entitled to a refund. In CSX Corp., Inc., 52 Fed. Cl.208 (2002), the Court of Federal Claims approved the refund of Railroad Retirement Tax Act (RRTA) taxes and FICA collected on amounts paid to employees under reduction-in-force programs....

ABSTRACT In this study, we construct explanations for the taxation of social security benefits based on previously identified dimensions of fairness (exchange, horizontal, and vertical equity). We then conduct an experiment to examine whether providing senior citizen taxpayers with explanations increases the perceived fairness of taxing social security. The results ......

Severance pay is generally considered compensation for services rendered and as such, wages subject to income tax and FICA tax withholding. The IRS has clearly stated this position in Regs. Sec. 31.3401(a)-1 (b)(4), which states, "any payments made by an employer to an employee on account of dismissal, that is, ......

One less obvious consequence of the Enron collapse was the renewed interest in Congress to regulate deferred compensation. Congress, angered because Enron executives who were aware of the company's impending bankruptcy were able to jump ship with their golden parachutes intact, enacted Section 409A of the Internal Revenue Code. In ......

AIRLINE INDUSTRY INFORMATION-(C)1997-2004 M2 COMMUNICATIONS LTD Italian airline Alitalia, the Italian government and Alitalia workers have agreed a deal on the issue of compensation to workers who will be made redundant as the struggling carrier restructures its operations. The agreement means that the airline can now begin in earnest its ......

Interview with Peter Lucash, AllBusiness.com's Medical Practice Advisor ......

Our 111-page Business Guide discusses key provisions of consulting and independent contractor agreements, as well as the tax implications, and ......

Our 200+ page Business Guide is available for immediate download. It contains advice on starting, growing, financing, and marketing a ......

All W2´s must be postmarked by January 31, 2006 per Federal Regulations. You give this to your employees, who use it in filing their tax returns. It tells how much compensation the employee received during the past year, and how much was withheld for various taxes. Copies go to the ......

The Jobs Creation Act, signed into law in 2004, permits private collection agencies to collect past due federal taxes. Although there has been opposition to the idea (for one thing, the agencies charge more for their services than it would cost IRS to hire additional employees), Congress has provided funding ......

The government is attempting to enlist small businesses in its latest effort to crack down on illegal workers, threatening increased prosecution and stiff fines for those who refuse to cooperate.

Andre and Lana got divorced in January, 2006. The two children, aged 8 and 10 live with their mom and have periodic visitation with their dad. The divorce decree calls for the couple to file a joint return for 2005 and for each party to pay ½ of any tax ......