AHA, AAMC briefs support challenge of resident FICA case
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).