The IRS announced that universities, hospitals and residents who filed claims for refunds within the three-year limitation would be contacted within 90 days with more information about recovering money paid under the Federal Insurance Contributions Act, or FICA.
Refund claims are no longer accepted. They must have been filed within three years of payment during the qualified period, which ended when the new regulations became effective April 1, 2005. The IRS did not respond before deadline to a request for the number of organizations with pending refund claims and the sum that the IRS expects to disburse to satisfy them.
The dispute over the status of medical residents goes back to a 1998 opinion by the 8th U.S. Circuit Court of Appeals. The court sided with the state of Minnesota's argument that it shouldn't have to pay FICA taxes for the University of Minnesota's medical residents, inspiring academic medical centers across the country to file claims for refunds.
Because the taxes are paid in part with dollars withheld from wages, former residents themselves may qualify for refunds if they or the organization that paid their stipend filed a claim on their behalf. See IRS FAQs.
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