Supreme Court decides that Medical Residents are not Exempt from Social Security Tax

SCOTUS, this morning, handed down a decision in Mayo Foundation for Medical Education and Research v. United States.  The Court found that medical residents in graduate programs receiving stipends did not qualify as exempt students under 26 U.S.C. § 3121(b)(10), as interpreted in recent Treasury Department Regulations, due to the fact that that they not “employed in the services of a school, college or university” nor are they “enrolled and regularly attending classes at such school, college, or university.”

The Court applied the two-part test of Chevron USA v. Natural Res. Def. Council, 467 U.S. 837 (1984)  and concluded that the Treasury rule “easily satisfies the second step of Chevron, which asks whether the Department’s rule is a ‘reasonable interpretation’ of the enacted text.”

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