Last Friday, the government asked the Supreme Court to review the Sixth Circuit’s decision in United States v. Quality Stores.  In that decision, the Sixth Circuit sided with taxpayers and concluded that certain severance payments that qualify as supplemental unemployment compensation benefit payments (or “SUB” payments) for federal income tax purposes are not subject to tax under the Federal Insurance Contribution Act (FICA).

The government’s certiorari petition argues that the Sixth Circuit’s decision is wrong, conflicts with decisions of the Supreme Court and other Courts of Appeals, and concerns a matter of exceptional importance.  According to the petition, the supplemental unemployment benefits issue is currently pending in 11 cases and more than 2,400 administrative refund claims, with a total amount at stake of more than $1 billion, which is expected to grow.

Quality Stores has 30 days to respond to the government’s petition, although that time may be extended.  Based on the calendar for the rest of the session, the Court will likely decide whether to review the case when it returns from summer recess in September.

In view of the existing circuit split, the fact that the government is asking for review, and the large amount at stake, there is a substantial likelihood that the Court will agree to hear this case.