Accountant questions tax

Sarah McKenzie

An accountant representing University medical students flooded local media with press releases Monday, claiming reports about student tax refunds stemming from an appellate court’s July 6 ruling were premature.
Charles D. Ulrich, certified public accountant out of Brainerd, Minn., said the University jumped the gun when they claimed $58 million will swing in their favor after the court’s ruling.
The Eighth U.S. Circuit Court of Appeals ruled July 6 that the University is not liable for Social Security payments made on behalf of medical students for 1985 and 1986.
The three-judge panel upheld a lower court’s ruling stipulating medical residents are exempted from paying Social Security taxes because they are considered students.
Ulrich argued the appellate court did not directly rule that students are entitled to refunds. That matter is under the jurisdiction of the Internal Revenue Service, he said.
But attorneys from the University’s general counsel’s office argue that unless the decision is appealed, the IRS is obligated under the law to refund the University $40 million in back payments, stemming from taxes paid since 1990.
The $40 million would be equally split between the University and medical residents.
Bill Donohue, associate general counsel for the University, said he expects the IRS to honor the court’s ruling.
The federal government has until October to appeal the court’s decision. The U.S. Supreme Court will consider hearing the case if a petition is filed.
The Office of the General Counsel has sent a memo to medical fellows and medical fellow specialists about the procedure for refund collection.
Donohue said Ulrich has solicited former medical students, charging a contingency fee for his services.
Ulrich said he consults for 370 former medical residents and fellows in their claims against the IRS.
Students filing claims with the help of the University will retain 100 percent of their claim, Donohue said.
He added that winter is the earliest students could expect to see a refund. By that time, the government will have probably exhausted all appeal avenues, he said.
Students must provide the University’s payroll office with a current address in order to file a claim.
Medical residents are also required to sign a consent form authorizing the University to file a tax-refund claim on their behalf.