The Internal Revenue Service has released additional information on how medical residents may be eligible for a refund on the employment taxes withheld from their paychecks by teaching hospitals.

In March 2010, the IRS announced that it would honor medical resident FICA claims based on the student exception for tax periods ending before April 1, 2005, when new regulations went into effect (see IRS to Honor Medical Resident FICA Refund Claims).

The IRS has recently posted additional FAQs to clarify whether a resident, former resident or employer filed a timely claim and may be eligible for a refund under the program.

In particular the IRS described the most common reasons why an employer or medical resident might not qualify for a refund:

• They did not file a timely claim for refund. (The period of limitations for filing a claim for tax periods before April 1, 2005 has expired.)

• They are not eligible for the student exception to FICA taxes because you were employed by a federal employer, such as a Veterans Administration hospital.

• The medical resident is a state or local government employee covered by a voluntary agreement (Section 218 Agreement) between the state and the Social Security Administration to provide Social Security coverage for workers. If the position was covered by a Section 218 agreement, and the agreement did not include an exception for students, then the wages were subject to Social Security and Medicare tax. 

The Supreme Court is scheduled to hear arguments this term in a case involving the medical resident FICA claims brought by the Mayo Foundation for Medical Education and Research (see Supreme Court Starts Another Taxing Term).

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