Marty J. Meehan - Page 14

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          applies in the case of severance pay, which is paid by an                   
          employer to an employee as a form of compensation for termination           
          and, in effect, as a substitute for wages.                                  
               We recognize that the right to severance pay accrues, if at            
          all, upon the occurrence of the one-time event of an individual’s           
          termination from employment.  Consequently, it is arguable                  
          whether severance pay, if paid in a lump sum, raises the same               
          types of administrative problems as are associated with the types           
          of recurring payments (e.g., salary, wages, and commissions) that           
          the Court of Appeals for the Fourth Circuit identified in United            
          States v. Jefferson-Pilot Life Ins. Co., supra at 1022.                     
          Nonetheless, although an employee’s rights to severance pay come            
          into being only upon termination, and although some employees may           
          receive a lump-sum severance payment, see Kroposki v.                       
          Commissioner, supra, in some cases severance is paid over a                 
          period of time, see, e.g., Gross v. Commissioner, supra                     
          (severance payments were made over a period of 18 months in                 
          amounts equal to the taxpayer’s salary before he was                        
          terminated).15  In these cases, taxes are withheld in the same              
          manner as salary and wages.  See, e.g., id.  Because severance              
          pay is paid by an employer to an employee and is often paid as a            

               15 We point out that bonuses, which typically are paid as              
          lump sums, are treated as salary or wages for purposes of                   
          continuing levies under sec. 6331(e).  Sec. 301.6331-1(b)(1),               
          Proced. & Admin. Regs.                                                      

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