The Internal Revenue Service has made a determination to accept the position that medical residents are excepted from FICA payroll taxes based on the student exception for tax periods ending before April 1, 2005, when new IRS regulations went into effect.
In recent years, the IRS has been involved in several court cases regarding the question of whether medical residents are eligible for the student exception to FICA. Last year, in Mayo Foundation for Medical Education and Research v. U.S., the Eighth Circuit Court of Appeals reversed two decisions by lower district courts. The court agreed with IRS regulations limiting the student FICA exception to students who are not full-time employees. However, other lawsuits have been ongoing, and it appears the IRS has decided to change its position.
Within 90 days of its determination on March 2, 2010, the IRS will begin contacting hospitals, universities and medical residents who filed FICA refund claims for these periods to provide more information and procedures. Employers and individuals with pending claims do not need to take any action at this time.
For more information, call (800) 919-1703 or visit www.irs.gov/charities and click on Medical Resident FICA Refund Claims. Taxpayers with currently pending suits should contact the Department of Justice attorney assigned to the case.
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