IRS Sued by University


The University of Rochester is filing a lawsuit against the IRS over tax refunds amounting to $26.4 million that university officials claim were unlawfully withheld by the government agency. This amount comes from money withheld from the salary checks of hundreds of medical students of the University between 1998 and 2004. The lawsuit also seeks to recover interest payments on the amount.

The contention held by the University is that their medical students are not full-fledged physicians and they serve for three to seven years at teaching hospitals such as Strong Memorial and Highland under the supervision of the hospital’s medical staff upon graduation from the University’s medical school. The sum of $26.4 million is the payroll tax made up of the salaries of the medical students and payments to the IRS from the University in equal shares and is taxed under the Federal Insurance Contribution Act (FICA).

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