Not For Profit/Exempt Organizations Blog

Tag Archives: FICA

Medical residents conclusively determined to be subject to FICA tax beginning April 15, 2005 under new U.S. Supreme Court decision

In Mayo Foundation for Medical Education and Research v. United States , the U.S. Supreme Court upheld the validity of a Treasury Regulation that states that the student exception from FICA (Social Security and Medicare) tax does not apply to medical residents because they work at least 40 hours per week. Applying the deferential two-part standard … Continue Reading

Medical Resident FICA — Action on Individual Refund Claims

We have been closely following the medical resident FICA refund issue. As we noted in our blog entry in March on the topic, the IRS conceded that refund claims for FICA taxes for medical residents for the periods before April 1, 2005 will be paid. The IRS has now announced this month that it has begun sending letters to individual medical residents who filed individual claims for FICA refunds. These letters ask the individuals to submit copies of their claims. … Continue Reading

United States Supreme Court will Hear Medical Resident FICA Case

Many health care and medical education institutions have claims pending with the IRS for refunds of the FICA (Social Security and Medicare) tax paid on wages for employed medical residents. The issue for these claims is whether the residents are "students," and their wages accordingly exempt from FICA tax, for purposes of the student FICA exception in the Internal Revenue Code. Last summer, the Eighth Circuit Court of Appeals held that this regulation was valid in the Mayo Foundation for Medical Research and Education and the University of Minnesota cases. These institutions petitioned the Supreme Court for certiorari. Yesterday, the United States Supreme Court granted the certiorari petition and will hear the appeal. … Continue Reading

IRS to Honor Certain Medical Resident FICA Refund Claims

The IRS has announced that it plans to honor certain medical resident FICA refund claims for periods before April 1, 2005, when new IRS regulations went into effect. The IRS's brief announcement does not indicate the terms on which claims will be paid. Still, the IRS notes that verification of the claim amount will be required and interest will be paid. … Continue Reading

Parsonage: Are Clerics Employees or Self-Employed?

Parsonage is a seemingly innocuous five line tax benefit in the Code.  This “innocent” provision of the Code, Section 107, appears to have befuddled many ministers and their professional advisors, however. About 90 years ago, Congress promulgated an exclusion from income for the rental value of the housing provided to a “minister of the gospel,” … Continue Reading

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