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09-837 Mayo Foundation for Medical Education and Research v. U.S.

By: WISCONSIN LAW JOURNAL STAFF//January 11, 2011//

09-837 Mayo Foundation for Medical Education and Research v. U.S.

By: WISCONSIN LAW JOURNAL STAFF//January 11, 2011//

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Tax
FICA; medical residents

Wages paid to doctors in residency programs are subject to FICA.

Mayo accepts the Treasury Department’s determination that an individual may not qualify for the student exception unless the educational aspect of his relationship with his employer predominates over the service aspect of that relationship, but objects to the Department’s conclusion that residents working more than 40 hours per week categorically cannot satisfy that requirement. Mayo argues that the Treasury Department should be required to engage in a case-by-case inquiry into what each employee does and why he does it, and that the Department has arbitrarily distinguished between hands-on training and classroom instruction. But regulation, like legislation, often requires drawing lines. The Department reasonably sought to distinguish between workers who study and students who work. Focusing on the hours spent working and those spent in studies is a sensible way to accomplish that goal. The Department thus has drawn a distinction between education and service, not between classroom instruction and hands-on training. The Treasury Department also reasonably concluded that its full-time employee rule would “improve administrability,” 69 Fed. Reg. 76405, and thereby “has avoided the wasteful litigation and continuing uncertainty that would inevitably accompany [a] case-by-case approach” like the one Mayo advocates, United States v. Correll , 389 U. S. 299 . Moreover, the rule reasonably takes into account the Social Security Administration’s concern that exempting residents from FICA would deprive them and their families of vital social security disability and survivorship benefits.

568 F. 3d 675, affirmed.

09-837 Mayo Foundation for Medical Education and Research v. U.S.

Roberts, C. J.

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