The Advantages of Offering Supplemental Unemployment Benefits Instead of Severance
September 10, 2013 - NORTON, MA - Total Management Solutions was featured in the recent blog post, "The Advantages of Offering Supplemental Unemployment Benefits Instead of Severance", by Vicki Nielsen, Of Counsel, at Ogletree Deakins.
This article was drafted by the attorneys of Ogletree Deakins, a labor and employment law firm that represents management. This information should not be relied upon as legal advice. This article was originally published on the Ogletree Deakins Employee Benefits blog.
According to the Internal Revenue Service (IRS), severance is subject to Federal Insurance Contribution Act (FICA) tax and certain supplemental unemployment benefits are not. That’s right, employers can provide today, just as they have for years, termination benefits that are FICA-tax exempt. One of the primary benefits of providing termination benefits that qualify for the IRS-recognized exclusion from FICA tax is that those benefits typically do not impact the employee’s eligibility for, or amount of, state unemployment benefits.
SUB-Pay Plans Could Ease Employer Severance Costs
August 12, 2013 - NORTON, MA - SUB-Pay Plans and Total Management Solutions were featured in a recent Workforce Magazine article by Patty Kujawa.
In the article, "SUB-Pay Plans Could Ease Employer Severance Costs", Ms. Kujawa explains that severance packages, and their included taxes, can put pressure on a company's cash reserves. However, a SUB-Pay Plan may be a better financial alternative to help companies lower severance costs.
Click here to read the article.
Not All Things Are Created Equal in Unemployment Benefits
The U.S. unemployment insurance (UI) benefit system serves as the first line of defense for millions of workers and their families when they lose their jobs. When workers become unemployed they often apply for and receive UI benefits. However, the rate and duration of UI benefits varies widely depending on the state in which the employee has worked.
During the mid to late 2000s, record high levels of unemployment coupled with low UI reserve funds have threatened the stability of the federal-state UI tax and benefit system. Since June 2013, 18 states and the U.S. Virgin Islands have exhausted their UI trust funds and are borrowing from the federal government to pay unemployment benefits. Meanwhile, 6 states are currently using employer financed bonds to repay federal loans, and 9 states have positive balances of less than six months of benefits in their state trust funds.
Putting Your Severance Plan to Work for You
How SUB-Pay Plans Can Save Companies up to 45% in Severance Costs
Whether the results of a merger, acquisition, business realignment or economic downturn, U.S. companies have been faced with the hard reality of restructuring, downsizing and staff reductions. In this business environment, many companies are reviewing their severance policies as a top priority, surprisingly; most severance plans have remained essentially unchanged for years. As a result, companies are missing significant cost-saving opportunities.
Sixth Circuit Denies IRS en banc in Quality Stores Decision; SUB-Pay Plans Still Guarantee Payroll Tax Exemptions
February 7, 2013 - NORTON, MA - The Court of Appeals has denied an IRS petition for a rehearing in the Quality Stores case. The IRS will appeal the decision to the Supreme Court while all protective refund claims are held in abeyance.
President Obama Signs American Taxpayer Relief Act of 2012
January 28, 2013 - NORTON, MA - On January 3, 2013, President Obama signed the American Taxpayer Relief Act of 2012. In addition to other provisions in the legislation, the Social Security portion of the FICA tax rate is back to its original 6.2% for 2013 after a two year decrease at 4.2%; and state unemployment insurance (“UI”) benefits were prolonged through the extension of emergency unemployment compensation (“EUC”) benefits and extended unemployment benefits (“EB”) until December 31, 2013.
Department of Justice Files for Rehearing En Banc in Quality Stores Case
November 2, 2012 - NORTON, MA - UPDATE - On September 7, 2012, in the case of United States v. Quality Stores, Inc., the Court of Appeals for the Sixth Circuit affirmed a Western District Court of Michigan’s holding that severance payments paid pursuant to an involuntary reduction in force are not taxable “wages” for purposes of Federal Insurance Contribution Act (“FICA”) tax withholdings.
Sixth Circuit Decision Affirms FICA Taxation on Severance Payments; SUB-Pay Plans Still Only Way to Achieve Guaranteed FICA Tax Exemption
September 20, 2012 - NORTON, MA - On September 7, 2012, in the case of United States v. Quality Stores, Inc., the Court of Appeals for the Sixth Circuit affirmed a Western District Court of Michigan’s holding that severance payments paid pursuant to an involuntary reduction in force are not taxable “wages” for purposes of Federal Insurance Contribution Act (“FICA”) tax withholdings.
- Latest Legislation Temporarily Decreases Social Security Rate; Prolongs State Unemployment Insurance Benefits
- First Cost of Living Adjustment and Taxable Wage Base Increase in Three Years
- Ways and Means Committee Introduces Emergency Unemployment Compensation Act
- President Sends Job Bill to Congress; Proposes Extension of Payroll Tax Relief and Unemployment Benefits
- Missouri Lowers Maximum Weeks of State Unemployment Insurance Benefits from 26 to 20
- In 2012, Michigan will Lower Maximum Weeks of State Unemployment Insurance Benefits from 26 to 20
- Total Management Solutions Extends It’s Trusted Advisor Connections with Corporate CEOs, CFOs and HR Executives
- Early Draft of 2011 Indiana House Bill Included SUB-Pay as Deductible Income Against State Unemployment Insurance Benefits
- Congress Extends State Unemployment Insurance Benefits into 2012
- New Legislation to Extend to Jobless Benefits into 2011 Presented to Congress
- Congress Considers Another Extension to Jobless Benefits into 2011
- Senate Approves Further Extensions to Jobless Benefits
- Senate Approves Another Extension to Jobless Benefits
- Important Information – FICA Tax Protective Refund Claims
- Senate Approves One Month Extension to Jobless Benefits
- Unemployment Insurance Provisions and COBRA Subsidy Extended into 2010
- 1.1 million unemployed workers will lose their UC benefits in December; $80 billion cost to extend UC benefits
- Congress Approves 14-20 Week Unemployment Compensation Extension; Will Aid Individuals on Verge of Exhausting Benefits
- John Lihzis, President and Chief Executive Officer, to speak at TALX Client Forum on September 23
- U.S. Court of Appeals Rules Severance Pay is Subject to FICA Tax