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School of Medicine Virginia Commonwealth University VCU Medical Center

Important Message for Medical Residents

FICA Refund for VCUHS Medical Residents and Fellows – January 1995 through March 31, 2004

 

February 7, 2013 - A special note regarding 2013 taxes and adjusted SSA earnings:
To eligible former residents and fellows, VCUHS enclosed a check representing your FICA refund, plus statutory interest received from the IRS. The portion of the refund that is attributable to the FICA withheld is not taxable. However, the interest on the refund may be taxable income to you, whether or not you receive a Form 1099-INT, Interest Income. VCUHS is required to file Form 1099-INT with the IRS and furnish a copy to you if VCUHS pays you interest of $600 or more. Forms 1099-INT will be issued to you in January 2014. {These were actually mailed January 27, 2014.} VCUHS will not file Form 1099-INT with the IRS or furnish a copy to you if the interest portion is less than $600. After issuing all refund checks, VCUHS will file Form W-2c, Corrected Wage and Tax Statement, with the Social Security Administration (SSA), and furnish a copy to you for any calendar year in which you are receiving a refund. {These are anticipated to be mailed in mid March, 2014.} This adjustment will show up on your SSA “earnings record.” Wages subject to federal, state and/or local income tax (Boxes 1, 16 and 18) will not be adjusted on Forms W-2c. The only adjustments that will appear on Forms W-2c are the decreases to your FICA taxable wages and applicable taxes (Boxes 3 – 6). You should consult your personal accountant if you have any questions about any impact this refund might have on your individual Forms 1040 filed for years to which the adjustments relate.

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November 6, 2013: The payments covering the remaining quarters of 1995 and 1996, which had previously been withheld by the IRS, have been sent to all eligible former residents and fellows. With less than a handful of individual exceptions, all of the refunded monies for the FICA medical resident refund through VCUHS have now been distributed. We appreciate the patience, understanding, and assistance our former residents and fellows have demonstrated throughout this entire process. Thank you.

In October 2010, VCUHS sent letters to our residents and fellows who trained with us between January 1, 1995 and March 31, 2004, explaining that the individual may be eligible to receive a FICA refund claim. It included an IRS required Consent Form to be included in the VCUHS claim. If you did not return your Consent Form pursuant to the instructions in the Consent Notice, your claim was not included in VCUHS’ perfected FICA Refund Claims. Thus, we do not have monies to distribute to you. Unless you previously timely filed an individual FICA tax refund claim on your own, the statute of limitations has may have expired for FICA tax refunds for tax periods prior to April 1, 2005. You should consult your tax professional if you have further questions regarding this issue.

June 20, 2013: We are pleased to inform you that FICA refund checks have been mailed to those eligible medical residents who provided us with timely consent to file claims with the IRS on their behalf. For each of you eligible to receive a refund, a check along with a detailed cover letter has been mailed to the last known address we have on record for you. If you have any questions regarding the refund, please send them by email to gmeadm@vcu.edu. Questions received will be answered as quickly as possible; however, please remember this is a busy time of the year for the School of Medicine since we have new residents arriving at the same time our new graduates are departing. For background information on the FICA Medical Resident Refund Claims matter, please see our previously posted messages.

March 8, 2013: The IRS continues to process the VCUHS claims and has not provided us with a timeline for completion. In the meantime, we have heard that other institutions have made distributions to their residents, and we realize that you may have heard similar reports. Please be assured that we will share new information regarding VCUHS on this website, and we encourage you to visit here on a regular basis. Thank you for your patience and understanding.

June 7, 2012: During the past several months, the IRS has contacted the Health System with questions regarding its refund claims. We have responded to all questions presented and are waiting for the IRS to take further action. Currently, we do not know when refunds will be issued and recommend that you continue to check this website periodically for updates.

September 1, 2011: We currently do not have any additional information on the status of the FICA Medical Resident Refund Claims. We realize that, during this process, many of you may have changed addresses. Therefore, if you previously returned a completed consent form to the Graduate Medical Education Office, we ask that you please provide us with your updated address by completing the online form below. Check back for periodic updates to this website. Thank you.

Update Address

April 20, 2011: In March of 2011, VCUHS submitted data to the IRS for the FICA Medical Resident Refund Claims. Data was submitted for the Health System as an employer as well as for those residents who consented to the filing of claims on their behalf. We do not know when we will receive a response from the IRS regarding our submission since the IRS has no required deadline for responding. We will update this web page as more information becomes available to us and recommend that you check this page for updates on a periodic basis. Thank you.

January 11, 2011: The U.S. Supreme Court rules that medical residents must be considered employees, not students, for payroll tax deductions. This does not apply to the refund period discussed below. For additional information see: "Medical residents must pay payroll tax" (UPI) or the Supreme Court opinion of the decision.

October 8, 2010: Between Monday and Thursday of this week, approximately 2300 letters were sent to VCUHS residents and fellows to the most current address available to us. The IRS has established a deadline for VCUHS to file its refund claim.  Accordingly, the consent form included with the letter must be postmarked, faxed, or emailed no later than December 1, 2010.   If you do not receive the letter by Friday, October 15th, please provide us with your current mailing address by completing the on-line form available HERE, noting non-receipt in the Comments section.

September 28, 2010: On March 2, 2010, the Internal Revenue Service (IRS) announced that it had made an administrative decision to accept the position that medical residents are exempt from FICA taxes under the "student FICA exception" for tax periods prior to April 15, 2005 when new IRS regulations took effect (IRS News Release IR-2010-25). 

In order to be eligible for a FICA tax refund resulting from this administrative decision, valid refund claims for the applicable time periods need to have been timely filed with the IRS.  Based on an internal review of claims submitted to the IRS over many years, the VCU Health System will be able to pursue refunds for the tax periods January 1995 through March 31, 2004.  (Teaching hospitals will vary in the time periods eligible for a refund, e.g., some may have eligibility periods that begin later than 1995, some may have eligibility periods that cover through March 31, 2005, and some may have eligibility periods interspersed with periods of non-eligibility.)            

As part of the refund process, former medical residents will be required to consent to the VCU Health System pursuing the FICA refund on each resident’s behalf.  We are preparing a letter with further explanation of the refund process to send to each resident we identify as eligible for a refund.  Included with the letter will be a consent form which must be completed and returned to VCUHS at the address indicated on the bottom of the form.  We anticipate mailing these letters by the end of September 2010.  If you believe you are eligible for a FICA medical resident refund but have not received your consent letter by November 1, 2010, please call the VCUHS GME Office at (804)828-9783.  In the meantime, to assist us with the consent procedure, we are requesting that any former medical resident enrolled in a residency program at MCV Hospitals/VCUHS between January 1, 1995 and March 31, 2004, provide current contact information by clicking HERE to access a secure webpage on which to provide that information.   

We do not know how long it will take the IRS to process the thousands of refund claims that will be submitted to it by teaching hospitals throughout the United States but it could be a year or even longer.  To the extent additional information related to the refund process becomes available, we will update this website message as needed.

For background information, a link to the IRS announcement and frequently asked questions is provided below for your convenience.

IRS Announcement