The Supreme Court will decide.
It has been agreed to head the Service’s appeal of a case in which the Sixth Circuit Court of Appeals ruled that the severance payments that are made part of a reduction in a workforce aren’t wages for FICA tax purposes. That decision conflicts with a holding of another Appeals Court on the same issue. Expect a decision by next June, after oral arguments early in the year. IRS estimates that more than $1 billion in refunds to employers hangs in the balance.
Two other key tax and benefit cases are also likely to get High Court review: Is the health care law’s contraception mandate valid? Health insurance plans that are subject to the law are required to provide no-cost coverage for contraception. A number of for-profit employers are challenging the mandate on religious grounds, and the results have been mixed in Appeals Court…two wins for the government and one employer victory. Both sides of have asked the Supreme Court to weigh in. Can taxpayers put up a hurdle to an IRS summons? An Appeals Court said taxpayers who claimed that the Service issued a summons for improper purposes can have pre-enforcement hearing, without first having to substantiate the claim. IRS says that goes too far and has asked the Supreme Court to reverse the decision.