ABC Taxes, Tips & Tools

(Qual­ity Stores D.C, Mich.) A retailer went bank­rupt, closed all its stores, and let its staff go.  The Dis­trict Court dis­agreed with the IRS’ posi­tion that sev­er­ance avoids FICA tax only if it is tied to unem­ploy­ment.  The IRS will most cer­tainly appeal, but this court specif­i­cally repu­di­ated a pre­vi­ous appeals case in which the IRS won.

Com­pa­nies might want to con­sider fil­ing pro­tec­tive claims of refund of FICA paid on sev­er­ance pay, espe­cially for lay­offs occur­ring in 2006. Why? Because the statute of lim­i­ta­tions for claims of refund for 2006 expires on April 15–just over 2 weeks away.

Employ­ers can file their pro­tec­tive claims using Form 941-X.  If an employer wishes to claim both the employee and employer share, they must first get the employ­ees’ con­sent OR refund the employ­ees’ share to claim the employ­ees’ por­tion.  If the employer obtains the employ­ees’ con­sent, they can pay the employ­ees’ share directly to them if the claim of refund is suc­cess­ful.  Alter­na­tively, the employer can just claim their share and leave it to the employ­ees to claim their half of FICA taxes.

As always, small busi­ness ser­vices and tax­a­tion are our busi­ness.  If you need help Please give Art & Busi­ness Con­sult­ing a call.  We would love to engage you as a client.

The usual dis­claimers: Although ABC has made every effort to insure the accu­racy of Taxes, Tips and Tools, mis­in­for­ma­tion, dis­in­for­ma­tion, changes, mis­takes, typos and hack­ers hap­pen, there­fore Art & Busi­ness Con­sult­ing LLC takes no respon­si­bil­ity for any action taken or results based on the infor­ma­tion sup­plied here in. The con­tent of this blog gen­er­ally applies to busi­ness and indi­vid­ual tax­a­tion in the United States of Amer­ica.  Inter­nal Rev­enue Ser­vice Cir­cu­lar 230 Dis­clo­sure:  As pro­vided for in Trea­sury reg­u­la­tions, advice (if any) relat­ing to fed­eral taxes that is con­tained in this com­mu­ni­ca­tion (includ­ing attach­ments) is not intended or writ­ten to be used, and can­not be used for the pur­pose of (1) avoid­ing penal­ties under the Inter­nal Rev­enue Code or (2) pro­mot­ing, mar­ket­ing or rec­om­mend­ing to another party any plan or arrange­ment address herein.  Art & Busi­ness Con­sult­ing LLC cur­rently does not have a cer­ti­fied pub­lic accoun­tant, human resource spe­cial­ist, or an attor­ney on staff; this infor­ma­tion is purely for edu­ca­tional pur­poses and not to be con­strued as legal or finan­cial advice. Art & Busi­ness Con­sult­ing LLC and its employ­ees, mem­bers and asso­ciates are not engage to prac­tice law; you always should dis­cuss legal mat­ters with your attor­ney before talk­ing to any­one else.