Mar 02 2009

Sixth Circuit Case Holds That Medical Residents May Be Exempt From FICA Tax

On February 26, 2009, the U.S. Court of Appeals for the Sixth Circuit joined the Seventh and Eleventh Circuits in holding that medical residents were not per se ineligible for the “student exception” from FICA tax. At issue in the case was whether residents at Detroit Medical Center qualified as "students" under Internal Revenue Code sections allowing an exemption from FICA tax for students. The Sixth Circuit rejected the IRS's assertion that the residents were not students, and remanded the case to district court for further proceedings. To date, every U.S. Court of Appeals that has rendered a decision regarding the applicability of the student FICA exception to medical residents' stipends has rejected the IRS's position that medical residents were not students and therefore ineligible for the FICA exemption. Read the complete opinion here.