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Court sides with IRS on medical residents' payroll taxes

Wall Street Journal, June 15, 2009

Medical residents may be considered as full-time employees whose pay is subject to Social Security taxes, a federal appeals court ruled. The Eighth Circuit U.S. Court of Appeals reversed two district court opinions that had concluded the U.S. erred in collecting Social Security taxes from medical residents at University of Minnesota and the Mayo Foundation for Medical Education and Research. The three-judge appellate court panel said the U.S. Treasury Department has latitude to interpret the IRS Code and made a "permissible interpretation" that medical residents are full-time employees subject to payroll taxes.