Tag Archives: taxes

Gov. Dayton drops business-to-business tax

MinnPost reports that Governor Dayton dropped the controversial business-to-business tax, which would impose taxes on legal services.

Gov. Mark Dayton said in a speech Friday morning that he’s taking the controversial business-to-business tax — which had been much villified by many executives  — off the table.

Speaking to the TwinWest Chamber of Commerce Legislative Breakfast at a St. Louis Park hotel, Dayton brought much relief to many business leaders there. State officials said it would have added $2.2 billion in state revenue by taxing business services such as advertising and legal advice.

MPR reported that Dayton said his initial budget proposal “obviously lacked public support” and that now “it lacks mine.”

Now, the anticipated new budget was set to be released on Tuesday, but it was delayed.  Governor Dayton’s staff stated that it will released “later in the week” since the tweaking of numbers continues. You can read MinnPost article here.

via Gov. Dayton takes business-to-business tax out of his budget | MinnPost.

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Filed under Minnesota, Pending Legislation

Severance Payments Held to be Exempt From FICA Taxes; Creates Split in the Circuits

In a recent case, United States v. Quality Stores, the Sixth Circuit ruled that certain severance payments paid to involuntarily terminated employees pursuant to an employer’s reduction in workforce are not “wages” for FICA tax purposes. This decision creates a conflict in the circuits, as the Federal Circuit, in CSX Corp. v. United States, 518 F.3d 1328, 1344 Fed. Cir. 2008, previously held in favor of the government’s position that such payments are “wages” subject to FICA taxes. The government is likely to request a rehearing or petition for certiorari to the Supreme Court.

The payments at issue were “supplemental unemployment compensation benefits” SUB payments, which are defined in the Internal Revenue Code as payments that are i paid to an employee, ii paid pursuant to an employer plan, iii paid as the result of an employee’s involuntary separation from employment, iv paid as the result of a reduction in force, the discontinuance of a plant or operation, or other similar conditions, and v includible in the employee’s gross income. For income tax withholding purposes, SUB payments are not treated as “wages,” but nevertheless are made subject to income tax withholding. However, for FICA tax purposes, the Internal Revenue Code does not explicitly address whether SUB payments are “wages” or are otherwise subject to FICA taxes.

Although employers outside the Sixth Circuit should continue to withhold FICA taxes from similar SUB payments, they may be advised to consider filing protective claims for refunds of the FICA taxes withheld to preserve the statute of limitations.

via Labor Employment Law Blog: Severance Payments Held to be Exempt From FICA Taxes; Creates Split in the Circuits.

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Filed under employment, legal decision, wage