A United States Supreme Court ruling dictates which year back pay from an employer is subject to payroll taxes, including the Federal Insurance Contributions Act (FICA) tax and the Employer's Annual Federal Unemployment (FUTA) tax.

The Court has held that back wages are subject to FICA and FUTA taxes for the year in which the wages are in fact paid, and not in the earlier year for which the wages are paid.  U.S. v. Cleveland Indians Baseball Co., (S Ct, 4/17/2001) 87 AFTR2d ¶ 2001-798.