For Former Medical Residents of LUMC During 1999 Through March 31, 2005

Loyola University Medical Center (LUMC) previously filed refund claims for social security and Medicare taxes (collectively, FICA taxes) paid with respect to its medical residents’ wages.  LUMC’s claims were based on the position that its medical residents are students eligible for a FICA tax exception.

The Internal Revenue Service (IRS) held these claims in suspense because there was a dispute as to whether the student FICA exception applied.  On March 2, 2010, the IRS made an administrative determination to accept the position that medical residents are excepted from FICA taxes for tax periods ending before April 1, 2005.

LUMC is currently processing these refund claims for tax periods between January 1, 1999 and March 31, 2005.  These refund claims cover both the employer share and the employee share of overpaid FICA taxes.  LUMC will be soliciting consents from its medical residents to collect refund claims on their behalf.

For additional information, please refer to the FAQs below 

What are FICA taxes?
FICA stands for the Federal Insurance Contributions Act. FICA taxes consist of two separate taxes-social security and Medicare taxes-that are paid on wages earned for services performed. Employers withhold and pay their employees' share of the FICA taxes and also pay the employer share.

Why are FICA refunds being paid to LUMC and its medical residents?
Loyola University Medical Center (LUMC) previously filed FICA refund claims for all tax periods in 1999 through 2007 based on the position that its medical residents are students eligible for the FICA tax exception under Internal Revenue Code section 3121(b)(10). LUMC's FICA refund claims covered both the employer share and the employee share of the FICA tax. In some cases, individual medical residents may have filed their own claim for the employee share of the FICA tax.

The IRS held these claims in suspense because there was a dispute as to whether the student FICA exception applied. On March 2, 2010, the IRS made an administrative determination to accept the position that medical residents are excepted from FICA taxes for tax periods ending before April 1, 2005.

Am I eligible to receive a refund?
Individual medical residents can be covered either under FICA refund claims they filed themselves or under claims filed by LUMC on their behalf. If you are relying on FICA refund claims filed by LUMC on your behalf, you are eligible to receive a refund for the 1999 through 2001 tax periods only if you previously consented to have LUMC collect a refund on your behalf and you do not retract that previous consent. Similarly, you are eligible to receive a refund for the 2002 through March 31, 2005 tax periods only if you now consent to have LUMC obtain a refund on your behalf in response to LUMC correspondence dated June 2010.

Note, however, that if you have already claimed and received a refund or credit for FICA taxes that were withheld from your medical resident wages, or if you filed an individual refund claim for such FICA taxes and that claim is still pending with the IRS, then LUMC will not be able to file a refund claim for those years on your behalf. This restriction does not apply if you filed a refund claim and it was rejected by the IRS.

I previously consented to have LUMC obtain a refund on my behalf. Do I need to consent again?
LUMC previously solicited consents to obtain refunds on behalf of its medical residents for the 1999 through 2001 tax periods. Even if you previously consented to have LUMC obtain a refund on your behalf, the IRS requires that LUMC give you an opportunity to retract your earlier consent. Therefore, if you would still like LUMC to collect a refund on your behalf for the 1999 through 2001 tax periods, you should now confirm your consent in response to LUMC correspondence dated June 2010.

What if I do not consent to have LUMC collect a refund on my behalf?
If you do not consent to have LUMC obtain your refund, you may be precluded from receiving any refund of the FICA taxes withheld and paid on your behalf because the time period for filing an individual claim for refund with the IRS likely has expired.

What is the significance of April 1, 2005?
On April 1, 2005, new regulations regarding the student FICA exception became effective. One part of these regulations states that an employee who works 40 hours or more (full-time employee) for a school, college or university is not eligible for the student exception. This part of the regulations generally excludes medical residents from the student exception.

What must I do in order to be included in LUMC's FICA refund claims?
You must carefully read and understand the official letter sent to you by LUMC, which has specific instructions regarding the forms you must complete. Once you have completed and signed the necessary forms, you must mail them to LUMC at the following address:

Loyola University Medical Center
Medical Resident FICA Refund Claims
c/o Rust Consulting
P.O. Box 592
Minneapolis, MN 55440-0592

These signed forms must be postmarked no later than 45 days after the date of the official letter sent to you by LUMC. Any response postmarked after this period cannot be accepted. Failure to timely return your signed forms to the above address precludes LUMC from obtaining a refund on your behalf.

If the IRS determines that I qualify for a refund, when can I expect to receive a refund check?
We are uncertain as to when the IRS will validate LUMC's FICA refund claims and pay the refund amounts (including accrued interest). However, upon receiving the refund, LUMC will promptly process and mail refund checks to those medical residents who consented in a timely manner.

What is the amount of refund I can expect to receive?
LUMC has not yet determined the amount of refund each medical resident may be entitled to. Once LUMC receives a refund from the IRS, it will compute the amount of overpaid FICA taxes and accrued interest to be paid to each medical resident and process refund checks accordingly.

If I receive a FICA tax refund, will the refunded amount be subject to federal income tax?
A refund of the applicable FICA taxes previously paid is not subject to federal income taxation. Interest on the refund is taxable to you. LUMC is required to file Form 1099-INT with the IRS and furnish a copy to you if LUMC pays you interest of $600 or more in a calendar year.

How will this refund impact my social security benefits?
If you receive a refund of FICA taxes, your earnings for social security coverage purposes will generally be reduced in an amount equal to the wages you were paid for services performed as a medical resident. This reduction will be reported on Forms W-2c, Corrected Wage and Tax Statement, which LUMC will file with the Social Security Administration (SSA) for each tax year for which you receive a refund. LUMC will also furnish copies of Forms W-2c to you. Please note that Forms W-2c are for informational purposes only and will not require you to amend your federal income tax return.

Social security benefits are based on your earnings over your working lifetime. Accordingly, based on your personal circumstances, a refund could have a detrimental effect upon disability, survivors, or retirement benefits that you or your family are receiving or may seek to receive in the future.

If you want information about the effect of a refund on your social security benefits, you should contact SSA directly at 1-800-772-1213 (toll free). You might want to review your social security record before and after your refund has been processed. You can use your current Social Security Statement or you can request a copy of your Social Security Statement at the following link: http://www.ssa.gov/mystatement.

Why do I need to complete and return the Taxpayer Identification Number Certification?
By completing and signing the Taxpayer Identification Number Certification, you certify, among other things, that you are a U.S. person. As a U.S. person, you are not subject to withholding on the interest component of the refund.

Whom should I contact if I have questions regarding this refund?
Because each medical resident's tax situation is different, we encourage you to discuss questions about your particular situation with your tax return preparer or other tax professional. For general questions about this refund claim, please call (866) 708-0916. This toll-free service is available Monday through Friday, 8:00 a.m. to 7:00 p.m. Central Standard Time.

Whom should I contact if the address on the official letter is different from my current address or if I plan to move?
All address changes and corrections should be reported either by phone at (866) 708-0916 or by mail at the following address:

Loyola University Medical Center
Medical Resident FICA Refund Claims
c/o Rust Consulting
P.O. Box 592
Minneapolis, MN 55440-0592