Supreme Court Rules for IRS, Against Medical Residents

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Supreme Court Rules for IRS, Against Medical Residents

January 12, 2011 by J. Michael Stolp

The Supreme Court has ruled unanimously in favor of the Internal Revenue Service, saying that medical residents are full-time employees who are subject to payroll taxes and don’t qualify for the student exemption.

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Posted in Tax | 1 Comment

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on January 13, 2011 at 7:15 am | Reply Ed Zollars

The most interesting issue in Mayo is that the Supreme Court appears to have brought Treasury interpretative regulations (at least final ones) to the same level of authority as direct legislative ones, clarifying that only the two part Chevron test applies, and not the more involved versions that previously made a distinction when Congress had granted specific legislative authority.
It also found there’s not a problem with the IRS using regulations to respond to negative prior court decisions (as it did in this case).
Finally–the vote was unanimous except for Justice Kagan who sat out the case (presumably because she was Solicitor General during the time the case was in the lower courts), and Justice Roberts delivered the opinion. So they at least seem to clearly agree this is how we look at regulations issued by Treasury.