Hyman Phelps and McNamara
Firm Publications

In the Name of Graduate Medical Education: What Mount Sinai Medical Center's FICA Tax Victory Means for Today's Teaching Hospitals
February 2010

After a multi-year battle in federal district and appellate courts, a nonprofit teaching hospital in south Florida was able to walk through a door that the Eighth Circuit and a district court in Minnesota first opened in the cases of Minnesota v. Apfel and United States v. Mayo Found. for Med. Educ. & Research (Mayo I). The issue presented in these earlier cases and then later in the Mount Sinai Medical Center of Florida, Inc. case was the applicability of the so-called "student exception" to FICA taxes, found at 26 U.S.C. § 3121b(10), as interpreted in the related Treasury Regulations at 26 C.F.R. § 31.3121(b)(10)-2. Mount Sinai's case, above all other FICA refund suits pending at the time, was selected by the Department of Justice (DOJ) as the best "test case." How Mount Sinai debunked the government's theories and seemingly altered the FICA tax landscape is a trail-blazing tale bound to benefit many of Mount Sinai's teaching hospital brethren.

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Karla L. Palmer (202) 737-7542 kpalmer@hpm.com
Other Author(s) Mark H. Churchill