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Post details: IRS Regulation Limiting Student Exception to FICA Taxes to Part-Time Employees Valid (Mayo Foundation for Medical Education and Research and Mayo Clinic, CA-8)
06/18/09
IRS Regulation Limiting Student Exception to FICA Taxes to Part-Time Employees Valid (Mayo Foundation for Medical Education and Research and Mayo Clinic, CA-8)
CCH (cch.taxgroup.com) reports:
Medical residents who were full-time employees of two medical education programs were not eligible for the student exception to FICA taxes.
Reg. §31.3121(b)(10)-2(d)(3)(iii) limits the exception to students who work only part-time by providing that the services of a full-time employee, defined as an employee who works for 40 or more hours a week, are not incident to, and for the purpose of, pursuing a course of study. Legislative history indicates that FICA exceptions were directed toward part-time workers; therefore, the full-time employee limitation in the amended regulation does not conflict with the plain language of the statute, is consistent with the origin and purpose of the student exception and is not invalid. The medical residents did not fall within the student exception because they worked more than 40 hours per week; therefore, they were full-time employees and their compensation for health care and patient services was subject to FICA taxes.
Reversing DC Minn. decisions, 2007-2 USTC ¶50,577 and 2008-1 USTC ¶50,262.
Mayo Foundation for Medical Education and Research, CA-8, 2009-1 USTC ¶50,432
Other References:
Code Sec. 3401
CCH Reference - 2009FED ¶33,533.23
CCH Reference - 2009FED ¶33,538.5056
CCH Reference - 2009FED ¶33,538.558
Tax Research Consultant
CCH Reference - TRC COMPEN: 3,122
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