New whitepaper: What does the Families First Coronavirus Response Act mean for employers?

New whitepaper on the Families First Coronavirus Response Act (including Emergency Family and Medical Leave Expansion Act, Emergency Paid Sick Leave Act, andTax Credits for Paid Sick and Paid Family and Medical Leave): What does the Families First Coronavirus Response Act mean for employers?

Authored by me, and my colleagues, Ethan Wilt and Madison Greenland (who, truth be told, took the lead on drafting).

SCOTUS: Severance Payments are Taxable Wages Under FICA

This just in! Minutes ago, the Supreme Court issued its opinion in U.S. v. Quality Stores, Inc. If you want to plow through 15-pages of FICA analysis, be my guest. If you want the cut-and-paste of the bottom line:

This case presents the question whether severance payments made to employees terminated against their will are taxable wages under the Federal Insurance Contributions Act (FICA), 26 U. S. C. §3101 et seq . . . . The severance payments here were made to employees terminated against their will, were varied based on jobseniority and time served, and were not linked to the receipt of state unemployment benefits. Under FICA’s broad definition, these severance payments constitute taxable wages.

Justice Kennedy for a unanimous Court, minus Justice Kagan who did not participate.

SCOTUS Hears Argument on Tax Withholdings for Severance Payments

I know, I know - nothing is more exciting than FICA and the tax implications of severance payments! Well, great news! The Supreme Court heard oral arguments on a case involving precisely that issue.

On Tuesday, the Court heard oral arguments in U.S. v. Quality Stores, Inc. (SCOTUSblog case page here). According to the government's brief, the issue presented is:

Whether severance payments made to employees whose employment was involuntarily terminated are taxable under the Federal Insurance Contributions Act, 26 U.S.C. 3101 et seq.

You can read the full transcript here (audio should be up here by Friday afternoon). According to Bradley Joondeph on SCOTUSblog, the smart money is on the government. We'll probably have to wait a few months for the formal decision.

New Jersey Recognizes Same Sex Marriages - Why it Matters for Pennsylvania Employers

On Monday, New Jersey became the fourteenth state to allow same sex marriages.A trial court ordered that such marriages would begin on Monday. Governor Christie appealed to the state Supreme Court, but after a an adverse preliminary ruling he saw the writing on the wall. He withdrew his appeal.

Why does this matter to Pennsylvania employers? Well, if a Pennsylvania employer has an employee who lives in New Jersey and has a same sex spouse, then he or she may qualify for FMLA leave to care for that spouse. If a same sex couple gets married in New Jersey, then they are treated as married for federal tax purposes regardless of where they live. Such couples are also recognized as "spouses" under the Department of Labor's guidance on ERISA (addressing benefits plans).

Welcome to the post-Windsor world! Employers must keep tabs on what other states are doing with same sex marriages to properly handle taxes, benefits, FMLA leave, and a host of other federal law issues.

IRS Addresses Same-Sex Marriages Post-Windsor

Federal agencies are starting to stake out their positions following the Supreme Court's decision in U.S. v. Windsor. The Court struck down the part of DOMA that defined marriages as only those between one man and one woman for over 1,000 federal statutes.

The IRS recently issued Rev. Rul. 2013-17, which addresses same-sex marriages for purposes of federal taxes. Cutting straight to the holdings:

1. For Federal tax purposes, the terms “spouse,” “husband and wife,” “husband,” and “wife” include an individual married to a person of the same sex if the individuals are lawfully married under state law, and the term “marriage” includes such a marriage between individuals of the same sex.

2. For Federal tax purposes, the Service adopts a general rule recognizing a marriage of same-sex individuals that was validly entered into in a state whose laws authorize the marriage of two individuals of the same sex even if the married couple is domiciled in a state that does not recognize the validity of same-sex marriages.

3. For Federal tax purposes, the terms “spouse,” “husband and wife,” “husband,” and “wife” do not include individuals (whether of the opposite sex or the same sex) who have entered into a registered domestic partnership, civil union, or other similar formal relationship recognized under state law that is not denominated as a marriage under the laws of that state, and the term “marriage” does not include such formal relationships.

Now, if you're wondering what this will mean for employers, my friend Mike Chittenden emailed me about some IRS Q&A on benefits plans (and other issues arising from the new ruling). Specifically, check out Q&A 16-19. For example, qualified retirement plans must recognize legal same-sex marriages based on where the couple married, regardless of where they live (but domestic partnerships and civil unions do not count).

Image: That is apparently the IRS logo - not official use.