Student Or Employee?— The Status Of Medical Residents In Relation To FICA Taxes

This article considers an issue which was resolved by the Supreme Court in the 2010 Term: the status of medical residents with respect to FICA taxes. Specifically at issue was whether medical residents qualify as students under Section 3121(b)(10) of the Internal Revenue Code, which qualification exempts both the resident and the university/hospital residency program from paying FICA taxes. Included with analysis of the various courts‟ opinions leading up to the Supreme Court decision are two brief case studies. The first focuses on an individual medical resident in the Penn State University Dermatology Residency Program, which considers whether his relationship with the program is closer to that of a student or employee. The second is a quantitative examination of randomly sampled medical residency programs within the geographic borders of various circuits. Both studies are guided by factors presented by one of the circuit courts for determining whether a medical resident qualifies as a student. I conclude, contrary to the Supreme Court, that the four circuit courts which adopted a case-by-case, facts and circumstances analysis of each medical residency program were correct in their analysis and that a practical analysis of the duties and functions of residents indicates that they are students who should be exempt from FICA taxes