What was the basis for these medical resident FICA tax refund claims?
The medical resident FICA tax refund claims stem from a decision of the U.S. Court of Appeals for the Eighth Circuit in 1998 in State of Minnesota v. Apfel which held that stipends paid to University of Minnesota medical residents in 1995-96 were not subject to FICA tax as a result of the student FICA exception. Since the decision of the Eighth Circuit in 1998, other U.S. Courts of Appeals have rendered decisions regarding medical residents' eligibility for the student FICA exception and all have held that medical residents are or could be eligible for the student FICA exception. Based on this extensive litigation, which has generally been decided in the favor of institutions employing medical residents, the IRS finally conceded in its Announcement (IR 2010-25) on March 2, 2010 that it would accept the position that medical residents qualified for the student FICA exception for periods prior to April 1, 2005.
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