Medical Residents Not Exempt from FICA Taxes

The state of Utah executed an agreement under Section 218 of the Social Security Act that exempted full-time students from FICA taxes. This agreement was later modified to include part-time students. Following this, the University of Utah sought FICA tax refunds with respect to its medical residents for tax periods dating back to 1995. The university claimed that medical residents were students under Utah’s Section 218 agreement. The U.S. District Court for the District of Utah disagreed, holding that Utah’s Section 218 agreement didn’t exclude medical residents from FICA. The Court noted that the university should have been aware of the Social Security Administration’s (SSA) longstanding position that medical residents are not students. In addition, the university produced no evidence that its understanding of Utah’s Section 218 agreement was ever communicated to the SSA. University of Utah , 120 AFTR 2d 2017-XXXX (DC UT).