New rulings on employment tax.

• Position: NEW Revenue Rulings - Brief Article

The Treasury Department and IRS have published two revenue rulings clarifying that payments by employers to employees made in connection with employment contracts are to be treated as wages for purposes of FICA, FUTA and federal income tax withholding.

Revenue Ruling 2004-109 clarifies that employment taxes must be paid--and income taxes withheld--on bonuses paid for signing an employment contract. The ruling also clarifies that, if an employment contract is cancelled before its agreed-upon end and a payment is made in lieu of the...