Labor & Employment Law

Medical interns eligible for student exemption from FICA tax

United States v Memorial Sloan-Kettering Cancer Center, (2d Cir. March 25, 2009) illustrates that employee status is not just important for labor and employment law purposes-there are tax consequences as well. Here, the 2d Circuit held that the lower court erred in ruling that medical residents are categorically ineligible for the student exemption from taxes under the Federal Insurance Contributions Act (FICA) as a matter of law.

The district court found the FICA language regarding medical residents was ambiguous and, relying upon its reading of the legislative history, concluded the interns were not "students" for FICA purposes and held the defendant hospitals owed payroll taxes on monies paid to the interns.

Significantly, however, the 2d disagreed. The court found the FICA language was not remotely ambiguous. "The statute expressly defines which individuals fall within the scope of the student exception: students who are 'enrolled and regularly attending classes.'"

Because the interns fit this description, they were potentially eligible for the exemption, thus the court remanded the case for the lower court to undertake a particularized inquiry into whether the interns here qualified for the exemption.

The decision is posted on the Internet at:
http://mail.wolterskluwerlb.com/t/314577/3708200/6725828/0/

Mitchell H. Rubinstein

Full post as published by New York Public Personnel Law on May 05, 2009 (boomark / email).