The Supreme Court has ruled unanimously in favor of the Internal Revenue Service, saying that medical residents are full-time employees who are subject to payroll taxes and don’t qualify for the student exemption.
The case, Mayo Foundation et al v. U.S., involved the Mayo Clinic in Minnesota and a hospital operated by the University of Minnesota. In late 2004, the IRS made a rule change and said that medical residents, as doctors in training, no longer qualified for the student exemption from paying Social Security and Medicare FICA taxes.
