Mayo Foundation for Medical Education and Research v. United States
United States Supreme Court
131 S. Ct. 704 (2011)
Wages earned by students working for their schools are exempt from Social Security taxes if the work is 'incident to' their studies under IRC section 3121(b)(10). After a circuit court held the Social Security Administration could not categorically deny medical residents student status, the Treasury Department in 2004 promulgated a regulation defining 40-plus-hour-per-week employees, including residents, as not 'incident to' their studies. Mayo Foundation (plaintiff), which runs residency programs where residents work 50 to 80 hours weekly for a stipend, sued the United States (defendant) for a refund of taxes paid on residents' stipends, arguing residents should be exempt. The district court granted Mayo summary judgment; the court of appeals reversed.
Whether an administrative regulation is entitled to deference by the courts where Congress has expressly authorized the agency to promulgate regulations and the regulation was enacted pursuant to that authority.