US Supreme Court To Consider Tax Rule On Medical Residents

[Celebration]

http://online.wsj.com/article/BT-CO-20100601-707781.html?mod=WSJ_latestheadlines

The U.S. Supreme Court agreed Tuesday to hear a challenge by medical colleges and teaching hospitals of a Treasury Department regulation requiring payment of Social Security taxes on behalf of medical residents.

Under a 2005 Treasury Department rule, medical residents and other "full-time employees" do not qualify for the general student exemption from Social Security taxes. At stake is the tax treatment of medical residents nationwide, of which there are currently about 100,000, and $700 million in annual revenue to the federal government, according to court papers.

The Mayo Clinic and the University of Minnesota challenged the Treasury ruling and have also sought refunds for Social Security taxes they already paid on behalf of medical residents.

The St. Louis-based 8th U.S. Circuit Court of Appeals sided with the IRS in a ruling last June.

In their petition to the Supreme Court, the Mayo Clinic and University of Minnesota said four other federal appeals courts have sided with hospitals against the government on the issue. That leaves medical residents in the 8th Circuit--which covers Arkansas, Iowa, Minnesota, Missouri, Nebraska, North Dakota and South Dakota--subject to taxes that their peers elsewhere in the U.S. do not have to pay, they argued.

[Abq_Sarah]

1. If they're getting paid for their time

Their employer needs to pay the FICA taxes. Private companies have to pay taxes on employees who are in training and this should be no different.