The Internal Revenue Service has made an administrative determination to accept the position that medical residents are excepted from FICA payroll taxes based on the student exception for tax periods ending before April 1, 2005, when new IRS regulations went into effect.

The IRS has been involved in several court cases in recent years over the question of whether medical residents are eligible for the student exception to FICA. Last year, in Mayo Foundation for Medical Education and Research v. U.S., the Eighth Circuit Court of Appeals reversed two decisions by lower district courts, and agreed with IRS regulations limiting the student FICA exception to students who are not full-time employees. However, other lawsuits have been ongoing, and the IRS has apparently decided to change its stance.

The IRS will, within 90 days, begin contacting hospitals, universities and medical residents who filed FICA (Social Security and Medicare tax) refund claims for these periods with more information and procedures. Employers and individuals with pending claims do not need to take any action at this time.

For more information, call (800) 919-1703 or visit and click on Medical Resident FICA Refund Claims. Taxpayers with currently pending suits should contact the Department of Justice attorney assigned to the case. 

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