TaxNewsFlash-Exempt Organizations

April 7, 2008
No. 2008-34

Federal District Court Grants Refund of FICA Taxes Relating to Medical Residents’ Stipends

The U.S. District Court for the District of Minnesota, granting the university’s motion for summary judgment, held that the University of Minnesota is entitled to a refund of FICA taxes withheld and paid on medical residents’ stipends during the second quarter of 2005. Regents of the University of Minnesota v. United States, Civ. No. 06-5084 (D. Minn. April 1, 2007).

For an electronic version of the 17-page order: University of Minnesota

KPMG Observation

This is the same court that previously invalidated recent IRS regulations that excepted medical residents from the student exclusion from FICA under section 3121(b)(10). Mayo Foundation for Medical Education and Research and Mayo Clinic v. United States, 503 F. Supp.2d 1164 (D. Minn. 2007). See TaxNewsFlash-Exempt Organizations 2007-94.

The IRS has appealed the Mayo case to the U.S. Court of Appeals for the Eighth Circuit.

For more information, contact Rick Speizman, National Partner-In-Charge, KPMG’s Exempt Organizations Tax Practice (ExoTax), at (202) 533-3084 or rspeizma@kpmg.com

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