Marty J. Meehan - Page 11

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               For the reasons described below, we believe that section               
          6331(e) is properly construed to include petitioner’s severance             
          pay within the meaning of “salary or wages”.                                
               First, severance pay is itself a form of compensation.  It             
          is paid by the taxpayer’s employer as compensation for                      
          termination of the employer-employee relationship.  In re W.T.              
          Grant Co., 620 F.2d 319, 321 (2d Cir. 1980); Straus-Duparquet,              
          Inc. v. Local Union No. 3, IBEW, 386 F.2d 649, 651 (2d Cir.                 
          1967).  In fact, on occasion this Court has characterized                   
          severance pay as a replacement or substitute for salary or wages.           
          See, e.g., Collins v. Commissioner, T.C. Memo. 2002-115; Gross v.           
          Commissioner, T.C. Memo. 2000-342.                                          
               Second, severance pay is computed generally by reference to            
          the employee’s base salary and the employee’s length of service             
          or tenure.  See Webster’s Tenth Collegiate Dictionary 1073 (1997)           
          (defining severance pay as “an allowance usually based on length            
          of service that is payable to an employee on termination of                 

          of the lapse of time.”  S. Rept. 94-938, supra at 389, 1976-3               
          C.B. (Vol. 3) at 427; see H. Rept. 94-658, at 306 (1975), 1976-3            
          C.B. (Vol. 2) 695, 998.  “The underlying purpose of the provision           
          [section 6331(e)] is to provide a means of levying upon                     
          remuneration payable to a taxpayer on a recurring basis for                 
          personal services performed for the payor.”  United States v.               
          Jefferson-Pilot Life Ins. Co., 49 F.3d 1020, 1022 (4th Cir.                 

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