IRS quick to deny FICA protective refund claims under Quality Stores Decision
Since the Quality Stores decision, the IRS has been quick to deny protective refund claims filed outside of the 6th Circuit for FICA taxes dealing with severance related supplemental unemployment compensation benefits paid in the 2006 tax year. These protective refund claims were filed in response to a Michigan District Court holding that certain involuntary severance payments were not subject to FICA taxes, United States v. Quality Stores, Inc., 2010 U.S. Dist. LEXIS 15825 W.D. Mich. Feb. 23, 2010.
In addition to denying Quality Stores claims filed by employers outside the Sixth Circuit, the IRS is also examining claims filed in the Sixth Circuit more closely.