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Washington, D.C., March 5, 2010AAMC (Association of American Medical Colleges) President and CEO Darrell G. Kirch, M.D., issued the following statement today commending the Internal Revenue Service (IRS) for its decision to refund Federal Insurance Contributions Act (FICA) taxes to teaching hospitals and medical residents who filed claims for services prior to April 1, 2005:
"The AAMC is pleased that, after years of litigation on this issue, the IRS has exempted residents from paying FICA taxes for time spent in their residency programs prior to April 2005, when new IRS regulations were put into place. The return of these funds will no doubt be welcomed by new physicians, as well as by U.S. teaching hospitals with pending claims before the IRS.
"The AAMC has always strongly believed that residents are students and that their relationship with U.S. teaching hospitals is educational. That is why we recently filed an amicus brief in support of the University of Minnesota and Mayo Foundation's request to the U.S. Supreme Court to hear the case Mayo Foundation for Medical Education and Research and the Regents of the University of Minnesota v. United States. This case challenges an IRS regulation that categorically subjected all residents' stipends to FICA taxes beginning on April 1, 2005. The lawsuit claims that the IRS's inflexible approach is counter to the governing statute, which exempts 'students' from FICA taxes and contemplates that student status be determined by the facts and circumstances of each institution.
"We hope that the Court will agree to hear this important case and provide the opportunity to demonstrate that residents are first and foremost learners, honing their professional skills so they can advance patient care."
http://www.aamc.org/newsroom/pressrel/2010/100305.htm
"The AAMC is pleased that, after years of litigation on this issue, the IRS has exempted residents from paying FICA taxes for time spent in their residency programs prior to April 2005, when new IRS regulations were put into place. The return of these funds will no doubt be welcomed by new physicians, as well as by U.S. teaching hospitals with pending claims before the IRS.
"The AAMC has always strongly believed that residents are students and that their relationship with U.S. teaching hospitals is educational. That is why we recently filed an amicus brief in support of the University of Minnesota and Mayo Foundation's request to the U.S. Supreme Court to hear the case Mayo Foundation for Medical Education and Research and the Regents of the University of Minnesota v. United States. This case challenges an IRS regulation that categorically subjected all residents' stipends to FICA taxes beginning on April 1, 2005. The lawsuit claims that the IRS's inflexible approach is counter to the governing statute, which exempts 'students' from FICA taxes and contemplates that student status be determined by the facts and circumstances of each institution.
"We hope that the Court will agree to hear this important case and provide the opportunity to demonstrate that residents are first and foremost learners, honing their professional skills so they can advance patient care."
http://www.aamc.org/newsroom/pressrel/2010/100305.htm
