Washington (Feb. 26, 2004) -- The Treasury and the Internal Revenue Service have issued proposed regulations on an exception from FICA employment tax for students employed by the school, college or university where the student is pursuing a course of study.

The proposed regs expand upon existing regulations and guidance and clarify that whether an organization is a school, college or university is determined based on the primary function of the organization. The determination of whether employees are students for purposes of the exclusion is made by examining the individual’s employment relationship with the employer to determine if employment or education is predominant in the relationship, according to the proposal.

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