Bob McPhail 6:31 a.m., May 19
Some Copley Retirees May -- Repeat, MAY -- Get Refunds
In 2006, Copley Newspapers offered an early retirement package to a group of veteran employees. The company warned that if enough people didn't take the offer, there would be layoffs. A sufficient number took the deal. They got 25% of their severance pay in December of 2006 and 75% in January of 2007. Now these former employees have received notice from Copley that they may be able to claim a refund for an overpayment of Social Security and Medicare taxes. This is based on a legal decision in Quality Stores vs. United States earlier this year. The gist was that severance payments made by employers to employees in an involuntary layoff are not subject to Social Security and Medicare taxation. In a letter to the retirees, Copley warns that a final resolution of the Quality Stores case may take several years. The law firm that won the case also warns that the Internal Revenue Service may appeal, and even if the IRS lost, the case would be a precedent in only a few states (not including California). However, under certain circumstances, the Quality Stores case could become a national precedent.
It's probably a longshot, but Copley is at least giving it a try. Copley sold the Union-Tribune in 2009, but the corporate structure still exists to dispose of real estate and take care of legal matters, such as the Quality Stores case.