Ronald J. Cappuccio, J.D., LL.M. (Tax)

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HOSPITALS WOULD NO LONGER BE EXCEPTED FROM PAYING

| Mar 9, 2004 | Uncategorized

HOSPITALS WOULD NO LONGER BE EXCEPTED FROM PAYING

EMPLOYMENT TAXES FOR MEDICAL RESIDENTS UNDER IRS PROPOSAL

In what some analysts characterize as an attempted end run

around court decisions that cut in the opposite direction,

the Internal Revenue Service issues a proposed rule under

which most medical residents and their employers would not

be excepted from paying employment taxes under the Federal

Insurance Contributions Act. The IRS also suspends a safe

harbor that institutions have used in applying the FICA

exception.

The Internal Revenue Code generally extends the FICA

exception to services performed in the employ of a school,

college, or university by an enrolled student. The IRS’s

proposal would narrow the current regulatory definition of

“school, college, or university” to only those employers

whose primary function is education, thus excluding

hospitals. The proposal would also prohibit institutions

from applying the exception to employees who work more than

40 per week
see: http://www.TaxEsq.com

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