Reply Brief Filed in Quality Stores

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September 3, 2013

Linked below is the government’s reply brief in support of its petition for certiorari.  The reply attempts to counter the taxpayer’s argument that the conflict between the Sixth Circuit and the Federal Circuit is unimportant because all taxpayers will choose to avoid the Federal Circuit in the future.  See our previous report here.  The government criticizes this argument for seeking to preserve a “forum shopping” opportunity and also remarks that “there is no reason to assume that other courts of appeals” faced with this issue will follow the Sixth Circuit’s reasoning rather than that of the Federal Circuit.  The government also dismisses the taxpayer’s suggestion that the issue can be resolved by promulgating new regulations, thus obviating the need for Supreme Court review.  The government asserts that the Sixth Circuit’s opinion suggests that the IRS has no authority to treat the severance payments as subject to FICA taxation and therefore the Sixth Circuit likely would not be swayed by new regulations.

As previously noted, the Court is scheduled to consider this petition at its September 30 conference and could announce whether it will grant certiorari as early as that afternoon.

Quality Stores – Government Reply Brief at Petition Stage