Several medical schools and universities sued the IRS for taking FICA taxes out of resident paychecks. The theory was that a “student exception” to tax laws also applied to residents and interns. As of 2005, the IRS changed the tax laws to close this loophole.
The IRS recently accepted the position that FICA taxes should not have been taken from intern and resident paychecks prior to 2005 and is now in the process of submitting refunds to the hospitals and residents who made claims.
If you were a resident before 2005, you may be entitled to a refund of any FICA taxes that you paid, in addition to statutory interest. Check with your training program to see whether it filed a claim on your behalf. I have heard through other docs that training programs will need to submit finalized claims in the near future, so act sooner rather than later if this situation may apply to you.
If your training program did not file a claim on your behalf, you may be out of luck since the statute of limitations has passed for filing such claims. Talk with your tax professional.
More answers to questions about this refund are here: http://www.irs.gov/charities/article/0,,id=219547,00.html
Any tax gurus out there? Since the statute of limitations has passed on the ability for an individual to claim these refunds and interest, can that money now be written off by individual taxpayers as an uncollectable debt?