AHA, AAMC briefs sup­port chal­lenge of res­i­dent FICA case

Modern Healthcare - - Late News -

The Amer­i­can Hos­pi­tal As­so­ci­a­tion and the As­so­ci­a­tion of Amer­i­can Med­i­cal Col­leges filed friend-of-the-court briefs in sup­port of a law­suit to be heard by the U.S. Supreme Court chal­leng­ing the In­ter­nal Rev­enue Ser­vice’s stance that med­i­cal res­i­dents aren’t stu­dents when it comes to ex­empt­ing them from pay­roll taxes. The court agreed June 1 to re­view a law­suit brought by the Mayo Clinic, which ar­gues that the IRS di­verged from the in­tent of Congress in the Fed­eral In­surance Con­tri­bu­tions Act, or FICA, with a rule change in 2005 that bars med­i­cal res­i­dents from qual­i­fy­ing for the ex­emp­tion. More than $700 mil­lion a year is col­lected from res­i­dents and their spon­sor­ing in­sti­tu­tions “sim­ply be­cause res­i­dents, in ad­di­tion to the lec­tures, con­fer­ences and other types of more for­mal class­room ed­u­ca­tion that they re­ceive, per­form at least 40 hours a week of su­per­vised pa­tient care,” the AHA writes. In March, the IRS agreed to re­turn pay­roll taxes to in­sti­tu­tions and stu­dents that filed claims for re­funds be­fore April 2008, the end of a three-year win­dow fol­low­ing the 2005 rule change (March 8, p. 16).

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