EMPLOYMENT TAX

Rev. Rul. 2004–109, page 958. Signing or ratifying bonuses. This ruling holds that certain amounts paid to an employee as a signing bonus for a baseball contract or as a ratifying bonus pursuant to a collective bargaining agreement are wages for purposes of the Federal Insurance Contributions Act (FICA), the Federal Unemployment Tax Act (FUTA), and the Collection of Income Tax at Source on Wages (federal income tax withholding). Rev. Ruls. 58–145 and 74–108 revoked. Rev. Ruls. 69–424 and 71–532 obsoleted.

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Rev. Rul. 2004–110, page 960. Contract cancellation; employment contract. This ruling holds that an amount paid to an employee as consideration for cancellation of an employment contract and relinquishment of contract rights is ordinary income and wages for purposes of the Federal Insurance Contributions Act (FICA), the Federal Unemployment Tax Act (FUTA), and the Collection of Income Tax at Source (federal income tax withholding). Rev. Ruls. 55–520 and 58-301 modified and superseded. Rev. Ruls. 74–252 and 75–44 modified.