Medical Resident FICA/Medicare Tax Refund Claims
April 7, 2010
The Internal Revenue Service (IRS) recently announced that it will refund the employer and
employee portion of FICA taxes paid for medical residents prior to April 1, 2005, so long as the
employer previously filed a timely refund claim with the IRS. The University has already made
the requisite filing on behalf of all of our medical schools and medical centers for tax periods
dating back to January 1, 1995.
FICA is a two-part tax consisting of Social Security (6.2%) and Medicare (1.45%). Please note
that the University of California medical residents ─ and other non-career employees ─ pay only
the 1.45% Medicare portion of the tax and do not pay the 6.2% Social Security portion of the tax.
Consequently, any refunds received by the University and its medical residents will be limited to
the 1.45% Medicare portion of the tax.
The IRS will be contacting the University by mid June to provide further instructions regarding
the refund process. We expect that, as part of this process, each resident eligible for a Medicare
tax refund will have to sign a written statement (i) authorizing the University to seek the refund
on his or her behalf, (ii) certifying that he/she has not already claimed a refund of (or credit for)
the Medicare tax, and (iii) attesting that he/she will not separately make a claim to the IRS for
refund of (or credit for) the Medicare tax in the future.
Once we receive definitive instructions from the IRS, we will contact residents from the
pertinent time period to obtain these signed statements. Individual refunds to the medical
residents will be processed shortly after the University receives the Medicare tax refunds from
the IRS. The IRS has not yet provided a timetable as to when medical schools, medical centers,
hospitals and universities will begin receiving refunds.
The University also must do a significant amount of work to quantify the Medicare taxes paid by
the over 4,500 residents employed each year since 1995 by the Davis, Irvine, Los Angeles, San
Francisco, and San Diego medical schools. This work must be completed before the IRS will
begin paying the refund claims. To this end, the Office of the President and the Office of the
General Counsel are already working with the campuses to document the amount of Medicare
tax refund due each resident. Given this preparatory work, we will be able to move quickly once
the IRS contacts us in June with the details of the settlement process.
We emphasize that this process relates only to the 1.45% Medicare taxes paid by residents prior
to April 1, 2005. The IRS contends that regulations that became effective on April 1, 2005,
subjected medical residents (and their employers) to full FICA taxes for work performed on/after
that date. Therefore, the IRS is unwilling to refund medical resident any FICA taxes paid
The Office of the President will provide more information about the refund process as soon
as the University receives further guidance from the IRS. In the meantime, please contact
Aurora Orozco in the UCLA Payroll Office at (310) 794-8728, if you have any questions.