Tax News

CCH (cch.taxgroup.com) reports:

A medical education foundation was entitled to a refund of withheld FICA taxes because amended regulations that disqualified medical residents from the student exclusion from FICA taxation are invalid. Interpretive regulations are reasonable only if they harmonize with the plain language of the statute or, if the statute is ambiguous, they are based on a permissible construction of the statute. However, according to the court, there is nothing ambiguous about the statutory language of the student exclusion, which excludes several categories of "service" from "employment" for FICA purposes, including service performed in the employ of a school, college or university when such service is performed by a student who is enrolled and regularly attending classes at such school, college or university. Therefore, the addition of regulatory language that limits the exclusion to students who work only part-time and perform services for organizations that comply with the "primary function" test arbitrarily changed the ordinary meaning of the statute.
Related case at 2003-2 USTC ¶50,615.
Mayo Foundation for Medical Education, DC Minn., 2007-2 USTC ¶50,577
Other References:
Code Sec. 3401
CCH Reference - 2007FED ¶33,533.23
CCH Reference - 2007FED ¶33,538.5056
CCH Reference - 2007FED ¶33,538.558
Code Sec. 3121
Tax Research Consultant
CCH Reference - TRC PAYROLL: 3,122
 

State Headlines

Illinois --Sales and Use Tax: Local Cable and Video Service Provider Fee Authorized
An Illinois local unit of government may adopt an ordinance imposing a service provider fee on a holder of a state-issued authorization to provide cable service or video service within the boundaries of that local unit of government. The fee would be 5% of gross revenues or the same fee paid to the local unit of government by any incumbent cable operator providing cable service.