(CN) – The Supreme Court has agreed to decide if the Treasury Department can “categorically exclude” medical residents and other full-time employees from a Social Security tax break for students.
The high court on Tuesday said it would take up the claims of the Mayo Foundation for Medical Education and Research, which argued that medical residents should not have to pay Social Security taxes under the Federal Insurance Contributions Act (FICA).
FICA exempts from taxes “service performed in the employ of a school, college, or university” by a “student who is enrolled and regularly attending classes at such school, college, or university.”
The Mayo Foundation argued that its residents and other full-time employees were entitled to this exemption.
The 8th Circuit disagreed, however, and said they could be categorically excluded because they work more than 40 hours a week.
Without comment, the Supreme Court agreed to take up the claim, which involves at least $2.1 billion in pending refund claims and about $700 million per year in taxes, according to the government’s own estimates.