I was looking for the rule that limits FICA to the first 6 months of sick pay or disability payments. I think I found what I need in the definition of wages and the exclusions therefrom in Code section 3121(a)(4). Does anyone know if there is any guidance on how employers must handle this? A company is continuing to withhold FICA from sick leave pay and then eventually refunding the amounts over what is due for the first 6 months. I'm wondering if this is a violation of a specific rule. Thanks for any help or thoughts on this.

I do not remember any rule that would be violated, but, I think that the employer might be creating an unnecessary reporting complication.

If they deduct beyond the 6 months and it continues long enough to be reportable on the 941 (and state forms for IT and UC ) for more than 1 Quarter, How will they make the adjusting entries on those forms? What happens if it involves a year end and beyond the 1st Quarter of the next year? Can the adjustments be made easily?

I think that if you review the Quarterly filings to see what would have to be adjusted, you will find that it is not worth the effort to deduct beyond the 6 months.

By the way, What about Federal Withholding?

Thanks GBurns. I don't know what they are doing about the federal withholding. The query comes from a union committee chair in the midst of negotiations. So, I got basically what I printed earlier. I reported that I didn't think this was the kind of action that would be covered in regulations but would browse a bit and ask here. I'll send this on and if more is wanted I'll get the details and let you know. Again, thanks for your help.