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Mayo Foundation for Medical Education and Research v. United States  (09-837) 
Supreme Court upholds IRS's categorical exclusion of medical residents from the student exemption from Social Security tax 
Decided January 11, 2011 
[Opinion full text

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"Residents" participating in accredited graduate medical education programs receive substantial payments (called stipends) from the Mayo Foundation for medical and patient care services provided by the residents at affiliated and unaffiliated hospitals and clinics. The Internal Revenue Code exempts certain students from Social Security taxes. Recently promulgated Treasury Regulations categorically exclude all medical residents and other fulltime employees from the definition of "student" in 26 U.S.C. § 3121(b)(10), which exempts from Social Security 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 US Supreme Court unanimously held that the Treasury Department's rule is a reasonable interpretation of § 3121(b)(10).

The Court applied the familiar two-part test of Chevron USA v. Natural Resources Defense Council, 467 US 837 (1984). The Court declined to use the more complex analysis of National Muffler Dealers Assoc v. United States, 440 US 472 (1979), indicating that Chevron analysis applies "with full force in the tax context." Applying Chevron analysis, the Court said that the Treasury rule "easily satisfies the second step of Chevron, which asks whether the Department's rule is a 'reasonable interpretation' of the enacted text."

Case below: Mayo Foundation for Medical Education and Research v. United States (8th Cir 06/12/2009)

Official docket sheet 
Certiorari granted June 1, 2010.
Oral argument:  November 8, 2010. [Transcript] [Audio

Question presented:   

Whether the Treasury Department can categorically exclude all medical residents and other fulltime employees from the definition of "student" in 26 U.S.C. § 3121(b)(10), which exempts from Social Security 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."

Certiorari Documents: 

Briefs on the merits: 

Counsel:

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