This should've been an easy case of reading the plain text of the statute. Unfortunately, it's merely another example of why the entire tax code should be shredded and redrafted.
Quality Stores was going bankrupt. The company offered severance packages to all employees, based on seniority and service time. It withheld and paid Federal Insurance Contributions Act (FICA) taxes, then asked the IRS for the more than $1 million in payments back, arguing that severance pay was not subject to FICA taxation.
The Sixth Circuit, relying on an income tax withholding statute, held that severance payments were not FICA taxable. But the U.S. Supreme Court, in an 8-0 decision (with Justice Elena Kagan recused), felt otherwise.