The U.S. Supreme Court ruled that medical residents are not exempt from paying taxes. This comes after a long battle between the IRS and big hospitals around the U.S.
WASHINGTON (Dow Jones)–The U.S. Supreme Court on Tuesday upheld an Internal Revenue Service requirement that medical residents pay Social Security taxes.
The ruling would appear to settle a long fight between the IRS and teaching hospitals including Mayo Clinic, and deprives the hospitals of millions they had hoped not to have to pay the government in the future.
Full-time students are generally exempt from Social Security taxes, but law clerks and tradesman apprentices are not.
In a 2005 rule, the IRS said a full-time employee is one that works more than 40 hours a week, and said medical residents were not part of the “student” category.
Mayo Clinic challenged the rule, arguing that like other students, residents attend lectures, perform laboratory work and are focused primarily on learning.
The high court, in an unanimous… continue reading
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