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In a blog posting earlier this year, we talked about the Sixth Circuit's decision in United States v. Quality Stores (Civil No. 10-1563, 6th Cir. 2012) affirming a lower court’s decision that supplemental unemployment compensation benefit (SUB) payments are not taxable as wages and are consequently exempt from FICA taxes. The Sixth Circuit’s decision in Quality Stores directly conflicts with the Federal Circuit’s prior decision in CSX Corp. v. United States, 518 F.3d 1328 (Fed. Cir. 2008), which held that such payments were subject to FICA. For many employers who have filed protective refund claims, the favorable resolution of this conflict could result in meaningful refunds.
Those speculating on whether Quality Stores will be appealed to the Supreme Court, and whether the Supreme Court will grant certiorari, will have to wait a little longer to find out. The original deadline for filing a petition for certiorari has been extended from April 4th to May 3, 2013.
Although the deadline for the government's petition has been extended, the April 15, 2013 deadline to file protective refund claims for 2009 (the oldest eligible year) has not. For employers that haven't already done so, particularly those located within the Sixth Circuit (Kentucky, Michigan, Ohio and Tennessee), there is still a small amount of time left.
A final word of caution about deadlines: If a protective FICA tax refund claim is denied, employers have two years from the date of denial to file a tax refund suit or obtain an extension of the two-year period by filing a Form 907. Given the uncertainty over the final outcome of this issue, it is unclear whether the IRS will summarily deny protective refund claims or wait until the dust settles. Nonetheless, employers whose refund claims are denied are well advised to keep track of the two-year deadline. If the Supreme Court accepts certiorari, it may take that long before the final word on the subject is written.