At stake are the Social Security and Medicare taxes the Internal Revenue Service has collected on severance checks employers gave those former employees. The Kiplinger Tax Letter, which called the ruling "stunning news," said a court in Michigan ruled the taxes should go back to the workers and the companies who paid them.

The taxes, called FICA on check stubs, are paid by employers and employees in equal amounts. That means both would be entitled to refunds if the ruling holds.

Tax experts said there were limits on who could be eligible for refunds. But there's also a rapidly approaching deadline for workers laid off in 2006.

"It's not the law of the land," said Jackie Perlman, an analyst at H&R Block's Tax Institute.

Perlman said that would be the case if the ruling had come from a tax court. But because it came from a civil court, it applies for now only to employees and employers in the Michigan court's jurisdiction.

It was not clear Monday whether the case would apply to Kansas City employees laid off by Ford Motor Co. or General Motors Co.

Neither company could be reached about the case.

Perlman also said those former employees would be expected to seek the tax refunds by going through their former employers if possible rather than directly as individuals.

"That's a perfect way to handle it," agreed Julie Welch, with the Kansas City firm Meara Welch Browne P.C.

Individuals, however, would have to seek a refund if the company no longer exists. An individual would need to file Form 843 with the IRS.

The case involved a retailer in Michigan that closed all its stores and laid off its workers, Kiplinger reported. It said the IRS probably would appeal.

There is a three-year statute of limitations on claiming refunds of Social Security and Medicare taxes. Kiplinger's report said employers and employees involved in layoffs in 2006 would need to act by April 15. It suggested companies file "protective refund claims" that would keep the potential for a refund alive. Kiplinger said the employer could decide to pursue a refund of its half or on both halves of the tax, sending the employees' share to them.