Cite as: 532 U. S. 200 (2001)
Opinion of the Court
would be calculated according to tax rates and wage bases higher than their levels in 1986 and 1987.
Uncertain about the proper rule of taxation, the Company paid its share of employment taxes on the back wages according to 1994 tax rates and wage bases. Its FICA payment totaled $99,382, and its FUTA payment totaled $1,008.10 After the Internal Revenue Service denied its claims for a refund of those payments, the Company initiated this action in District Court, relying on Bowman v. United States, 824 F. 2d 528 (CA6 1987). In Bowman, the Sixth Circuit held that "[a] settlement for back wages should not be allocated to the period when the employer finally pays but 'should be allocated to the periods when the regular wages were not paid as usual.' " Id., at 530 (quoting Social Security Bd. v. Nierotko, 327 U. S. 358, 370 (1946)). The District Court, bound by Bowman, entered judgment for the Company and ordered the Government to refund $97,202 in FICA and FUTA taxes.11
On appeal, the Government observed that two Courts of Appeals have held, in disagreement with Bowman, that under the law as implemented by Treasury Regulations, wages are to be taxed for FICA purposes in the year they are actually received. Walker v. United States, 202 F. 3d 1290, 1292-1293 (CA10 2000) (finding Nierotko "inapposite" and Bowman "unpersuasive"); Hemelt v. United States, 122 F. 3d 204, 210 (CA4 1997) (finding it "clear under the Treasury Regulations that 'wages' are to be taxed for FICA purposes in the year in which they are received"). The Court
10 Although the Company also withheld $99,382 to pay the employees' share of FICA taxes, it does not seek to recover any taxes paid on behalf of the employees in this suit.
11 This amount is slightly less than the total FICA and FUTA taxes paid by the Company in 1994. The reason is that one of the employees who received a 1994 payment for wages due in 1987 received no wages from the Company in 1987. The Company thus owed a small amount of FICA and FUTA taxes on the back wages paid to him even when those wages were allocated back to 1987.
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