Student FICA Exception

MARCH 2012 – UPDATE: In early 2012, the IRS requested further documentation to support  the refund claims submitted in November, 2010. The requested information has been submitted to the IRS. We now believe the claim is in the final stages of review by the IRS. We are anticipating that review to take an additional 3-6 months before we receive more information from the IRS.

Please continue to forward any address or contact information changes to Nathan Johnson at nathan.johnson@bassett.org. 

DECEMBER 2011 – UPDATE: Please forward any contact or address information changes to Nathan Johnson at nathan.johnson@bassett.org.

March 2011 – UPDATE: In November 2010, Bassett Medical Center did perfect their refund claims for the period January 1, 2000 to March 31, 2005 with the IRS.

• We have been informed by the IRS that it will be 6-18 months before they will act on those claims. Therefore, Bassett Medical Center does not anticipate receiving any refunds (and therefore sending any refunds to applicable residents) in 2011.
• As updates are received from the IRS, we will continue to update this website.
• If your contact information changes, please continue to forward those changes to Karen Zuill.

January 2011 - UPDATE: In a case of Mayo Foundation for Medical Education and Research et al. v. United States, a unanimous U.S. Supreme Court ruled on January 11, 2011 that medical residents who spend most of their time working with patients are reasonably classified as employees rather than students and therefore are subject to Federal Insurance Contributions Act taxes. This ruling applies to periods after April 1, 2005 which is the date that the IRS modified the regulations. In response to this decision rendered recently by the Supreme Court, Bassett Medical Center will be asking the IRS to withdraw claims made for the periods April 1, 2005 to December 31, 2006.
 

Attention Former Mary Imogene Bassett Hospital (d/b/a Bassett Medical Center) Resident:

We are pleased to announce that for tax periods before April 1, 2005 the IRS has determined that medical resident stipends are exempt from FICA taxes based on the “student FICA exception." The announcement from the IRS as well as the IRS Q&A document can be accessed using the below links:

Announcement: http://www.irs.gov/pub/irs-tege/nr-2010_25.pdf
IRS Q&A: http://www.irs.gov/charities/article/0,,id=219547,00.html

Bassett Medical Center has filed refund claims on behalf of its residents for stipends paid between January 1, 2000 and March 31, 2005.

In order to process the claim and receive your portion of taxes to be refunded, the IRS is requiring that medical or pharmacy residents paid by Bassett Medical Center during these periods sign and return consent documents provided to them by Bassett Medical Center. We have already collected many of these forms from residents during this timeframe.

Bassett Medical Center must perfect their refund claims with the IRS by mid-November. Therefore, we are asking that any former medical or pharmacy resident paid by Bassett Medical Center during the time period noted above help us expedite the process by submitting their name, current mailing address, email address, and the dates of their residency to the Director, Accounting Operations at Bassett Medical Center. The email address is karen.zuill@bassett.org. Additionally, please use this email address to keep us advised of any changes to your personal information during this process.

As noted above, in order to receive this refund, Bassett Medical Center must file with the IRS by mid-November. Therefore, only those residents that have returned signed consents to us by      October 25, 2010 will be included in the refund request. If and when the IRS sends the refunds to Bassett Medical Center, all eligible residents whom have returned a signed consent form will be issued a check for their refund amount for the applicable periods.

We will post updates related to the student FICA exemption as the information becomes available from the IRS; as always we advise you to consult with your tax advisor regarding how your participation in this program will impact you.