FICA Protective Claims


On Tuesday March 25, 2014, the U.S. Supreme Court issued its opinion in United States v. Quality Stores Inc., finding that severance compensation is subject to tax under the Federal Insurance Contribution Act (FICA), overturning a September 2012 Sixth Circuit Court of Appeals ruling that could have meant refunds estimated at over a billion dollars to both employers and employees.

In an eighteen-page opinion, Justice Kennedy, on behalf of the Court wrote, “[u]nder FICA’s broad definition, [the] severance payments constitute taxable wages.” This decision will likely result in the denial of all applicable protective claims filed to this point. Additionally, further litigation in this matter is not expected.

Based on this decision, the potential for a refund of taxes paid on severance payments has been virtually eliminated. As such, ADP is discontinuing FICA protective claim services at this time.

Should you have any questions regarding this update, please call our FICA Protective Claims hotline at 800-800-6659 or email us at