I missed out on the Medical Resident Medicare Tax Refund

[jtc3339]

I missed out on the Medical Resident Medicare Tax Refund Claims because I didn't submit an "Employee Consent Form." Is there anything I can do to still get the refund? It doesn't seem fair that the IRS can withhold money that they owe me. Isn't there a statute of limitations or something or am I just being naive? A friend of mine said he just got a refund of $17,000.

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[LoudBark]

How long ago were you in residency?

 

[jtc3339]

I was a resident from 2000 to 2003.

 

[wooster201106]

I know someone who had a similar situation. So, in March of 2010, after losing a lawsuit that, I believe, was initially filed by the Mayo Clinic, the IRS finally conceded they would honor medical resident FICA refund claims for trainees who had those taxes deducted up to April 1, 2005. The issue had to do with whether trainees were considered "students" or "employees" for tax purposes. Mayo argued they should be considered students and the Treasury argued employees, and, therefore, their wages should be taxable. The Treasury lost, but after April 1, 2005 changed their definition of student such that any trainee working over 40hrs/wk could no longer be considered a student.

To answer your question: though you should have been eligible for a refund given your employment dates prior to 2005, unfortunately, the statute of limitations to file a claim expired several years ago, and you cannot appeal that decision. Most institutions filed claims on their own behalf (for their portion of the FICA taxes) as well as on the trainees behalf, after obtaining their consent. I'm assuming they used last known addresses to track former trainees down, but I'm not sure how they attempted to contact them.

Unfortunately, if you have not received and signed a consent form by now, I doubt there's anything you can do at this point. To be sure, you should contact the GME department of your former training institution and verify that the deadline has passed, but the odds are very slim you will be able to obtain a refund at this point if you have not already been contacted by your former training institution.

As far as the IRS being fair...well...it's the IRS, since when has the IRS been fair. They get to play by their own rules. Your friend must have been in training for quite some time, or had quite a salary to have received that big of a refund, even with statutory interest. Most trainees are probably looking at refunds in the thousands but $17K seems kinda steep. I doubt that many will be looking at numbers like that. Who knows though, too many variables to account for to know for sure.

Sorry to be the bearer of bad news. If you're interested the IRS has a FAQs pertaining to this:

http://www.irs.gov/pub/irs-tege/medresident_fica_qa_10132010.pdf

If it's any consolation, you can take solace in knowing that your Social Security benefits (assuming it'll still be around when you become eligible) won't be lower as a result of having received the FICA refund. Awesome, am I right?

 

[Apollyon]

I have a story on two sides of this. I did a prelim year at a Mt. Sinai affiliate. They did all the right stuff, and I am waiting for a check for about $5k - the refund, and interest on that.

However, I also did my residency at Duke (not in IM). For my years there, Duke had abandoned filing protective claims. Then, as stated above, by the time the ruling had come down, the statute of limitations had expired. So, that money will NOT be coming.

However, again, as stated above, since that money was paid into SS, you have accrued that many more SS credits (cue uproarious laughter here).

I would rather have the money up front. One person at Ernst and Young told me that about half of the hospitals with training programs in the US did not file the protective claims, so you're not alone.

 

[wooster201106]

...However, I also did my residency at Duke (not in IM). For my years there, Duke had abandoned filing protective claims. Then, as stated above, by the time the ruling had come down, the statute of limitations had expired. So, that money will NOT be coming...

So you had the misfortune of training at Duke during the only time period that they did not file protective claims (i.e. 2003-2005)? If you were a trainee prior to that, you should have received a consent form allowing them to file on your behalf, and should have been eligible for the refund.

What really sucks for you and a lot of the affected residents just finding out about this is the statute of limitations to file an individual claim expired long ago. So, if their institution never filed a claim on their behalf, or if they were not able to track the residents down to obtain their consent, those residents are SOL. I'd be pretty pissed considering the amount of the potential refund, which just based on the refund you expect to receive for one year, is not insignificant. I guess the $17K is not all that inconceivable after all. I never really realized how much the SS and Medicare yearly contributions amount to.

One person at Ernst and Young told me that about half of the hospitals with training programs in the US did not file the protective claims, so you're not alone.

Considering the amount of money that was at stake and that training institutions were in the loop while residents were not, it's hard to believe that the percentage of programs that failed to file claims would be anywhere near that high. The employer portion of the FICA taxes over a 10-14 year period plus interest X number of trainees, would, I'm guessing, amount to refund checks in the millions per institution.

 

[Apollyon]

Mt. Sinai said it would indeed be in the many millions. I don't recall if the MSH guy floated me a number, or I confabulated $50million.

As for Duke, yeah, I was there 2003-2006.

 

[mgs]

So much for integrity. The GOV and the IRS are a piece of ****! If money is due, why have statute of limitations. Just give the money due to whomever is entitled to it.

 

[wooster201106]

Mt. Sinai said it would indeed be in the many millions. I don't recall if the MSH guy floated me a number, or I confabulated $50million.

As for Duke, yeah, I was there 2003-2006.

Man, that really sucks. I don't understand why Duke didn't pursue all years. It doesn't make any sense that they would file claims for some but not all years they were eligible for a refund. What I also don't get is when did the institutions first know and file the claims for their portion of the FICA taxes. I'm assuming the same statute of limitations applies to them as well, but they must have filed their claims prior to the expiration of the SOL pending the final outcome of the lawsuits that were filed. So why not notify all former residents who could potentially be affected and allow them time to file individual claims before the SOL expired. A lot of residents got screwed out of a lot of money because by the time they were notified by the programs, the SOL for them to file had already expired. I can see lawsuits being filed over this, but I doubt they'll get anywhere.

Apparently, the suit filed by Mayo was not the original court case. The first court case was filed by the University of Minnesota all the way back in the mid-90s. The IRS lost on appeal in '98. They really dragged their feet on this, and didn't concede until 2010 to refund the taxes, but by then it was too late for anyone who hadn't already filed a claim. I wouldn't be surprised if they intentionally were using delay tactics and biding time to allow the SOL to expire so as to reduce the number who could file for refunds and any eventual payout.

Mayo filed suit after the ruling in 2005 that changed the way residents/fellows were defined (as employees now and not students) and lost that on appeal to the Supreme Court in 2011. I think it's really lame that Duke, or those institutions that were aware but didn't file claims, didn't notify those residents earlier on who could have filed on their own behalf even if they themselves weren't interesting in pursuing all years. Some institutions even went so far as to hire professional search firms to track down former residents/fellows while others didn't even bother to file claims. Go figure.

 

[wooster201106]

So much for integrity. The GOV and the IRS are a piece of ****! If money is due, why have statute of limitations. Just give the money due to whomever is entitled to it.

It cuts both ways. In most cases, the IRS can't go back more than 3 years (of course there are always exceptions) and audit you for taxes. Likewise, if you fail to claim a refund within 3 years, you lose it.

In this instance though, the waters are quite a bit murkier. This refund was established through multiple lawsuits arising from claims filed by multiple institutions over 10 years ago. Since the validity of the refund had to be determined by a court's interpretation of a tax statute, how does one determine when the clock on the SOL started running?

 

[dozitgetchahi]

The biggest sham of all here is the fact that the government saw fit that medical trainees - who are already being paid coolie wages for the number of hours they have to work - just couldn't be considered 'students' anymore, and had to be soaked for income taxes.

 

[Rachel50]

I missed the deadline, too. Did you figure out any recourse? Wondering about asking a tax attorney.

 

[Peterdoc]

I missed the deadline, too. Did you figure out any recourse? Wondering about asking a tax attorney.

I trained from 1991 through 1996. I just heard about the refund from a friend who got a check for $15000 from Georgetown. I contacted UMKC where I trained they said they could not locate me ?? and the deadline long passed. It does not seem fair to have a SOL on money owed to MR. Any ideas about what to do IF anything can still be done?

 

[Gpan]

Can someone please let us know what are u guys talking about? Is this something for the 00's residents? Can us new residents get some money too

 

[NotAProgDirector]

There's nothing you can do. The deadline for submitting has passed. This is an old issue, in the past, anyone training >=2000 is not affected at all.

The brief story (in case anyone is interested) is that some programs sued the gov't claiming that residents were students, and hence didn't have to pay FICA tax. It's a pretty bogus argument IMHO, because residents are clearly more employees than students. The hospitals did it because FICA is paid 50% by employer and 50% by employee, so they wanted their 1/2 back. The key was you needed to file long ago, then the court case got drawn out, there were multiple appeals, in the end the hospitals won. The gov't meanwhile had rewritten the rules so that there is no question that residents now pay FICA tax. (the initial rule was written such that a student working part time as part of a work-study program wouldn't pay FICA).

For those grousing that the gov't should give you some refund now, ignoring the statute of limitations -- remember that this works both ways. The SoL (ironic abbreviation, no?) also protects you from that same gov't deciding that an unpaid parking ticket from 1982, with fines and interest, will now cost you $30,000.

 

[Apollyon]

Not true as to >2000, as I was 2002/2003, and got a check for $5k from Mt. Sinai 2 months ago. The rest is true, though. Well, at least, for the money that was put in, you got credits towards Social Security! Yeah!

 

[Gpan]

damn, this must be the first time being old is a bonus LOL. That was a joke people

 

[The stubborn on]

OK, if all of this is true about statute of limitations how did my classmates receive their refunds from 1994-95 etc.? They signed their consent forms in 2009-2010. I called IRS with this same question and they told me that institutions ( hospitals) file their consents in timely manner and then started to reach individuals - so i happened to be an unlucky one who was not found. My friend got 36K for her training 1994-1999. I have a suspicion that my training institution possibly obtained refund on my behalf. You have any comment on this?

 

[NotAProgDirector]

OK, if all of this is true about statute of limitations how did my classmates receive their refunds from 1994-95 etc.? They signed their consent forms in 2009-2010. I called IRS with this same question and they told me that institutions ( hospitals) file their consents in timely manner and then started to reach individuals - so i happened to be an unlucky one who was not found. My friend got 36K for her training 1994-1999. I have a suspicion that my training institution possibly obtained refund on my behalf. You have any comment on this?

Contact them. Not sure you have any other choice. I don't think there's a way to contact Social Security and ask (although you are free to try!)

 

[Consigliere]

Just received a check from Rush for $16.5k for residency from 2000-2003. I filled out the appropriate paperwork sometime in 2011 and honestly forgot about it. It was definitely an unexpected surprise!

 

[P Diddy]

Just received a check from Rush for $16.5k for residency from 2000-2003. I filled out the appropriate paperwork sometime in 2011 and honestly forgot about it. It was definitely an unexpected surprise!

What letter does your last name begin with (or just give me ballpark if you're worried about anonymity)? I have a theory that they're doing this alphabetically.

p diddy

 

[Malabargold]

I have a story on two sides of this. I did a prelim year at a Mt. Sinai affiliate. They did all the right stuff, and I am waiting for a check for about $5k - the refund, and interest on that.

However, I also did my residency at Duke (not in IM). For my years there, Duke had abandoned filing protective claims. Then, as stated above, by the time the ruling had come down, the statute of limitations had expired. So, that money will NOT be coming.

However, again, as stated above, since that money was paid into SS, you have accrued that many more SS credits (cue uproarious laughter here).

I would rather have the money up front. One person at Ernst and Young told me that about half of the hospitals with training programs in the US did not file the protective claims, so you're not alone.

Duke covered for most of the time, stopping in 2002 I think.
I just received a check for nearly 50k!
Let's go Duke

 

[LoudBark]

The hits just keep on coming.

There are attending docs out there who were in residency up to 2004 that are finding a sweet check in their mailboxes for $15K for doing a 3 year IM residency.