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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:
- Brief
for Petitioners Mayo Foundation for Medical Education and Research, Mayo
Clinic, and Regents of the University of Minnesota
- Brief
for Respondent United States of America
- Brief
for Loyola University Medical Center in Support of Petitioners
- Brief
for the Association of American Medical Colleges, the American Council
on Education, the Association of American Universities, Association of
Public and Land-Grant Universities, American Osteopathic Association,
and the American Association of Colleges of Osteopathic Medicine in
Support of Petitioners
- Brief
for American Hospital Association in Support of Petitioners
- Brief
for Tax Professor Carlton M. Smith in Support of Petitioners
- Brief
for University of Texas System in Support of Petitioners
- Brief
for BJC Health Care, Capital Area Health Consortium, Inc., Henry Ford
Health System, Memorial Sloan-Kettering Cancer Center, and Oregon Health
& Science University in Support of Petitioners
- Brief
for the University of Alabama at Birmingham, University of Arkansas,
Boston Medical Center, Brigham and Women’s Hospital University of
Chicago Medical Center, Christiana Care Health Services, Cleveland
Clinic Foundation, Dartmouth-Hitchcock Medical Center, Emory University,
Franklin Square Hospital, George Washington University, Georgetown
University Hospital, Good Samaritan Hospital, Harbor Hospital, Johns
Hopkins University, McGaw Medical Center of Northwestern University,
Maine Medical Center, Massachusetts General Hospital, Michigan State
University, Montefiore Medical Center, Mount Sinai School of
Medicine/Mount Sinai Hospital, National Rehabilitation Hospital, New
York Medical College, New York University School of Medicine, University
of North Dakota, University of Pittsburgh Medical Center, University of
Rochester, Saint Louis University, University of Southern California,
Medical University of South Carolina, Spaulding Rehabilitation Hospital,
Stanford University, Thomas Jefferson University, Union Memorial
Hospital, Vanderbilt University, Washington Hospital Center, and
Yale-New Haven Hospital in Support of Petitioners
- Brief
for Professor Kristin Hickman in Support of Respondent
- Brief
for the Committee of Interns and Residents and the American Medical
Student Association in Support of Respondent
- Brief
for Doctor's Council S.E.I.U. in Support of Respondent
Counsel:
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