Labor & Employment Law

SCOTUS to decide on exempting medical residents from Social Security tax

The US Supreme Court granted certiorari today in Mayo Foundation for Medical Education and Research v. United States. [Details, briefs]

The issue is whether IRS can categorically exclude medical residents from the student exemption from Social Security tax.

"Residents" participating in accredited graduate medical education programs receive substantial payments (called stipends) from the Mayo Foundation for medical and patient care services provided by the residents at affiliated and unaffiliated hospitals and clinics. The Internal Revenue Code exempts certain students from Social Security taxes.

Recently promulgated Treasury Regulations categorically exclude all medical residents and other fulltime employees from the definition of "student" in 26 U.S.C. § 3121(b)(10), which exempts from Social Security taxes "service performed in the employ of a school, college, or university" by a "student who is enrolled and regularly attending classes at such school, college, or university."

The trial court held that the regulation was invalid. The 8th Circuit reversed, holding that the regulation "is a permissible interpretation of the statutory student exception." The US Supreme Court granted certiorari to review the 8th Circuit judgment.

Question presented:

Whether the Treasury Department can categorically exclude all medical residents and other fulltime employees from the definition of "student" in 26 U.S.C. § 3121(b)(10), which exempts from Social Security taxes "service performed in the employ of a school, college, or university" by a "student who is enrolled and regularly attending classes at such school, college, or university."

Case below: Mayo Foundation for Medical Education and Research v. United States (8th Cir 06/12/2009)

Certiorari Documents:

• Petition for certiorari 
• Brief in opposition 
• Petitioners? reply 
• Amicus brief of Georgetown University et al. 
• Amicus brief of the Board of Trustees of the University of Illinois 
• Amicus brief of the Association of American Medical Colleges 
• Amicus brief of the American Hospital Association 

Full post as published by Ross' Employment Law Blog on June 01, 2010 (boomark / email).