IRS To Honor Medical Resident FICA Refund Claims

The Internal Revenue Service (the “IRS”) recently published News Release IR-2010-25 (the “Release”) announcing that it made an administrative determination to accept the position that medical residents are excepted from FICA taxes based on the student exception for tax periods ending before April 1, 2005 (the “4/1/05 Rule Change Date”), when new IRS regulations went into effect. According to the Release, the IRS will, within 90 days, begin contacting hospitals, universities and medical residents who filed FICA (i.e., Social Security and Medicare tax) refund claims for these periods with more information and procedures.

The FICA refunds discussed in the Release represent an issue on which the interests of hospitals and physicians are clearly aligned. Physicians who were residents in the 4/1/05 Rule Change Date period can receive a refund for any FICA amounts that were withheld when they were residents during such time. Hospitals likewise have an incentive to see physicians avail themselves of these refunds insofar as they, too, will be entitled to refunds for the matching FICA contributions that they made on behalf of the residents.

For more information on this issue, please contact Carey F. Kalmowitz, Esq. or Adrienne Dresevic, Esq. at (248) 996-8510, or visit the HLP website.