A longstanding battle between the government and hospitals was settled by the U.S. Supreme Court, which ruled in favor of the Internal Revenue Service. As a result, full-time medical residents, who were previously exempt from paying Social Security taxes, will be required to pay taxes in the future, Dow Jones Newswires reports.
The lawsuit began in 2005 after the IRS defined a full-time employee as an individual who works more than 40 hours each week, automatically including medical residents in that category. However, many teaching hospitals retaliated, citing that the residents should fall under the classification of a student since their activities in the hospital are centered around education, Dow Jones notes.
"At a time when our members are looking at reduced resources, we could have used these resources for other things, like patient care and education programs," Association of American Medical Colleges regulatory counsel Ivy Baer told Dow Jones.
As a result of the ruling, teaching hospitals and their medical residents will see some changes during filing season, as they will each be required to pay their share of Social Security taxes, with half being paid by the employer and the remainder being paid by the employee.
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