While there are no tax cases on the Supreme Court's docket for the new term yet, several cases are potential candidates. According to Alan Horowitz, the Sixth Circuit's Sept. 7 decision in United States v. Quality Stores, No. 10-1563 (6th Cir. 2012), is a strong candidate for cert. This case centers on whether severance payments are to be treated as "wages" for purposes of FICA taxation. In 2008, the Federal Circuit upheld the IRS position that most severance payments are taxable as wages under FICA in CSX Corp. v. United States, 518 F.3d 1328 (Fed. Cir. 2008).
"The Sixth Circuit has now rejected CSX," said Horowitz, "holding that a textual analysis of the relevant statutes shows that these payments should be classified as 'supplemental unemployment benefits pay' that Congress did not include within FICA 'wages.' " In addition, Horowitz noted that "this case has another wrinkle that makes it a Supreme Court candidate, as one of the subissues in the case is a dispute over the scope of congressional legislation that was designed to modify in part the Supreme Court's decision in Rowan Cos. v. United States, 452 U.S. 547 (1981)."