U student staff could see refund if IRS approves

by Nichol Nelson

Students suffering from a shortage of cash after a wild spring break might be in luck if they worked for the University sometime between 1995 and 1997.
Last week, Payroll Services sent out more than 15,000 letters telling student employees they may be entitled to a refund of improperly paid income taxes. Students might receive a check for almost eight percent of their total wages for those years, if the Internal Revenue Service accepts the University’s claim.
For example, if a student made $10,000 during the years in question and qualifies for the refund, they would see a return of 7.65 percent of their taxable wages, or $765, if the refund is approved.
The refund is a result of overpayment of Federal Income Contributions Act, which appears on most pay stubs as FICA. Both the University and students pay into the FICA fund.
Last week’s letter asks students to sign a consent form allowing the University to request the refund from the IRS. If a student does not return the form to Payroll Services by April 9, the University will not request a refund on their behalf.
Payroll Services screened student employees to see who was eligible for the refund.
“We only sent letters to students who were identified as having a potential refund opportunity,” said Beth Nunnally, director of taxation for the University.
The refund mainly affects people who worked more than 20 hours a week and had FICA taxes withheld. New, more liberal IRS guidelines caused payroll officials to question withholdings from the three-year period.
Officials caution that the refund is not a sure thing.
“The refunds are not guaranteed,” said Nunnally. “The IRS will have to accept the request.”
Kevin Mlodzik, a senior in psychology who has worked at Walter Library for four years, said the refund is a welcome surprise.
Although Mlodzik said he didn’t fully understand the tax jargon in the letter, he filled out the refund request anyway.
“I’m just doing what they suggested,” Mlodzik said.
Mlodzik discussed the possible refund with a friend, and said they both agreed the University deserves praise for pursuing the refund.
“It’s nice if they made a boo-boo that they came back to fix it,” Mlodzik said.
But it may not be quite as benevolent a move as it appears. The University and student employees share the burden of the FICA taxes. Both parties pay half of the 15.3 percent tax. Student contributions were taken out of student employee wages, and the University paid its 7.65 percent from alternate revenue sources.
Terrence O’Connor, vice president of finance, approved the proposal. He said the University will be able to claim its half of the overpaid FICA tax whether or not a student returns the refund form.
The University’s share is more than spare change, according to an initial query to the IRS.
Nunnally said the institution stands to gain more than $2.7 million from the refund request. She stressed that the University cannot collect any of the student refund portion and said that students are free to pursue their refund independently.
The University will file the refund request on April 15, the last day before the statute of limitations runs out for the 1995 calendar year.