It is no longer possible for House Officers to submit Consent Forms to be included in the FICA Tax Refund Claim.  The deadline for Consent Form submission has passed.  Using payroll information and data on the Consent Forms that were submitted in a timely manner, the University has submitted a FICA Tax Refund Claim to IRS.  

The claim requests a refund of the FICA tax for House Officers who had appointments during January - March 2005 time period.  Individuals who submitted a Consent Form have the potential of receiving back the FICA tax that was withheld from their salary payments.

When information is received from IRS about the claim settlement, House Officers who submitted Consent Forms will be contacted.

Please read the original announcement below for more details about the FICA Tax Refund Claim and who was eligible.

Original Announcement: 

In March 2010, the IRS announced that it will accept the position that medical residents (House Officers) meet the student exception for FICA tax withholding, but only for tax periods ending before April 1, 2005.  If you worked as a House Officer at the University of Michigan between January - March, 2005 and had FICA tax withheld from your salary, you may qualify for a FICA tax refund.

The University has identified 954 individuals who may be eligible and has sent them a notification letter and consent form (mailed on July 22, 2010).  The consent forms, when returned by the individuals, give the University permission to pursue a tax refund on their behalf.

To date the University is only able to pursue tax refunds for the 3-month window in 2005.  This is based on a recent court case in the 6th circuit and the fact that the University filed a protective claim for all House Officers for calendar year 2005. The University has also filed a protective refund claim for the 2006 year and intends to file a protective claim for future years as well. The University is not able to file claims for periods before 2005. 

Frequently Asked Questions (FAQ) are included below for your convenience.  If you have questions about your eligibility for a tax refund, please contact the Tax Department at (734) 763-3282 or ejenning@umich.edu.  If you worked as a House Officer between January - March 2005 and have questions about the consent form, please contact the Payroll Tax Section at (734) 936-3512 or leslibro@umich.edu.

FREQUENTLY ASKED QUESTIONS
(Whereas the University refers to House Officers, the IRS information refers to medical residents.)

1. Is it possible that a medical resident is entitled to FICA refund claim with the Internal Revenue Service (IRS)?
The Internal Revenue Code (IRC) Section 3121(b)(10) exempts from FICA taxation students who are enrolled in and regularly attending classes at a school, college, or university. Court cases in the 8^th circuit (Michigan is in the 6^th circuit) have held that medical residents may qualify as students entitled to this exception.

2. Does the IRS consider medical residents as students?
The IRS has traditionally concluded that medical residents do not meet the student exception from FICA. In fact, last year, the IRS had 16 docketed cases in various circuits denying medical residents this exception. The IRS had suspended processing any and all medical resident FICA refund claims. Please note that the federal government collected from medical residents each year FICA taxes in excess of a billion dollars a year.

3. Did the IRS recently change its position?
Yes, in part. This March, the Internal Revenue Service (IRS) announced that it will accept the position that medical residents meet this student exception but only for tax periods ending before April 1, 2005.

Importantly, for tax periods after April 1, 2005, the IRS will continue to take the position that medical residents are full-time employees under the regulations and therefore ineligible for the student FICA exemption.

4. What is the significance of April 1, 2005?
On April 1, 2005, the new regulations regarding the student FICA exception became effective. One part of these regulations clearly states that an employee who works 40 hours or more (full-time employee) for a school, college or university is not eligible for the student exception. This part of the regulations excludes medical residents from the student exception.

5. Who can file FICA refund claims?
Both the institutions that employed medical residents and individual medical residents may file refund claims. Institutions can be covered under FICA refund claims they filed themselves. Individual medical residents can be covered under FICA refund claims they filed themselves or under claims filed by the institutions that employed them.

6. Can a former University medical resident file a FICA refund claim for periods before April 1, 2005?
No. The period of limitations for filing a claim for tax periods before April 1, 2005 has expired. If you did not file an individual FICA refund claim, then the statute prevents you from recovering any the refunds in question.

7. Has the University filed any refund claims?
Yes, based on a recent court case in the 6th circuit, the University was able to file claims dating back to the calendar year 2005. Also, the University filed a protective refund claim for the 2006 year and, as things stand, intends to file for future years as well.

8. Who is eligible to receive a refund?
The University may seek a FICA tax refund on behalf of the medical residents for the period of January 1 to March 31, 2005. The savings are estimated to be approximately $800,000 for the University and $800,000 in the aggregate for medical residents.

Please note that medical residents who did not have FICA tax withheld during the 3-month time period are not eligible for refunds. FICA tax was not withheld for individuals who were paid fellowships or who had a non-resident alien tax status. Further note that the IRS may disallow those claims for medical residents who did not participate in an accredited ACGME Program.

 9. What step needs to be taken to secure these refunds
For the University to file refund claims on behalf of the eligible medical residents mentioned above, it must obtain completed consent forms from these individuals.