United States v. Quality Stores, Inc., 572 U.S. ___, 134 S. Ct. 1377 (2014)

Before and following the filing of an involuntary Chapter 11 bankruptcy, Quality Stores and its affiliated companies terminated thousands of employees. The employees received severance payments, and Quality Stores reported those payments as wages on W-2 tax forms, paid the employer’s required share of FICA taxes and withheld the employees’ share of FICA taxes. Quality Stores then asked 3,100 former employees to allow it to file FICA tax refund claims for them, of which approximately 1,850 employees agreed. After the IRS neither allowed nor denied the claim for refund, Quality Stores initiated a proceeding in the Bankruptcy Court seeking a refund of the disputed amount. In this opinion, the United States Supreme Court held that the severance payments constituted taxable wages under FICA.