POTENTIAL TAX REFUND – Deadline April 15, 2014!
Tuesday, March 11, 2014
I wanted to make you aware of a possible windfall for your company. The Supreme
Court is considering a case which might provide the opportunity for refunds of
payroll taxes paid since 2010. We are available to help you make a protective claim,
but the claim for 2010 taxes must be made by April 15, 2014. The Supreme Court
case involves whether severance pay is truly pay for work. If severance pay is
not pay for work (wages) then the FICA and Medicare tax should not be due. If this
is true, then these payroll taxes previously paid should be available for refund.
There is no dispute regarding income tax withholdings. As the Supreme Court has
not made a final decision, a current claim cannot be approved by the IRS. However,
if a claim is not filed by April 15 of this year, taxes paid during 2010 will not
be available due to the statute of limitations of three years after the original
due date of the returns. The solution is to file a protective claim prior to April
15. The IRS will generally deny the claim based on current interpretation. Once
the Supreme Court has made a final decision, if the decision is in the favor of
the employer the refund denial can be appealed and the taxes refunded. If the protective
claim is not made, no appeal can be made for 2010. Due to the risk of a decision
for the IRS, you will want to weigh the cost of filing the claim against the possible
refund. Additional refunds may also be available for the years 2011 through 2013
as well. However, your organization may wait to file these claims until the case
has been decided, or April 15 of subsequent statute years, whichever comes first.
If you paid out severance pay during the year 2010 give me a call and we can discuss.
We would be glad to help you consider your options. Together we can determine the
size of refunds and the probable cost of filing the claim. If you determine the
refund is worth the cost of the filing we would be glad to prepare the 941X filings
for you as well.