Topeka— More than 1,100 former University of Kansas medical students are dividing more than $17 million in tax refunds as the result of successful litigation challenging their obligations to pay Social Security and Medicare withholding taxes when they worked as residents.
The refunds were sent last week, according to state officials, who announced the paybacks today.
Officials at the Kansas Department of Administration said that about 1,140 former residents received about $17.75 million. The sum was based on their Federal Insurance Contribution Act (FICA) withholdings and interest. The litigation that resulted in the payments affected medical schools across the country.
“We’ve worked hard over many years to ensure that the money that residents and the KU Medical Center paid to the IRS is returned. This is good news for our former medical residents, and we look forward to the return of the full amount of the employer contribution,” said KU Chancellor Bernadette Gray-Little in a prepared statement.
“Employees from the Department of Administration are delighted to be part of the dedicated team that has worked over the past 18 years to see these refunds become a reality for the medical residents and the state of Kansas. It’s an exciting time for everyone involved in this project.” said Nancy Ruoff, payroll services manager for the state.
The contested FICA withholdings occurred between Jan. 1, 1993 and March 31, 2005.
The medical schools claimed that the residents were exempt from FICA under federal tax policies of the time because they were students. The Internal Revenue Service in 2005 clarified its regulations, making it clear that the residents are employees of the medical schools and therefore subject to the withholdings.
Officials said the state would receive $25 million, the employer's share of the contested withholdings.
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