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FICA Refund for Residents


The first criteria to qualify for a FICA tax refund, an applicable former resident must complete the Employee Consent Form and deliver it to HAI by September 23rd 2010.  HAI will accept the completed forms in one of three ways: 1) by mail to Healthcare Affiliates, Inc., 1 Vale Rd., Suite 200, Bel Air, MD; or 2) by fax to 410-879-3266; or 3) scanned in an acceptable format and attached to an email addressed to  HAI will confirm receipt of properly completed Employee Consent Forms upon request.  

In conversations with the IRS, they have stated emphatically that they want to see a significant effort on the part of hospitals in contacting former residents; in fact, they have suggested that they "expect" an 85% rate in order for the Hospital's claim to be deemed acceptable.  Therefore, we are requesting that each former resident spread the word to former classmates to contact HAI as soon as possible.


1. When was the FICA Refund claim filed on behalf of SINAI and affected residents

HAI filed the FICA refund claim on behalf of SINAI and all affected residents on November 30th, 2010.  We have been advised by the IRS unit which is auditing these refund claims that SINAI was one of the first hospitals to successfully file its FICA Refund claim.

2. What is the review process now that the FICA claim has been filed?

This is a “first-time ever” program for the IRS.  Accordingly, the IRS itself has been pursuing something of a “piece-meal” approach to the review process of these claims.  As of the end of April, 2011, the IRS auditor assigned to SINAI’s claim has confirmed that the initial review of the SINAI claim has successfully been completed (and SINAI did not, for example, need to provide additional or clarifying information regarding the claim).  However, at this juncture, the IRS auditors themselves are waiting for instructions on the “next step” of the review process.  We have been advised that the delay the IRS (and by extension SINAI and affected residents) is experiencing is a combination of certain difficulties generated by the computer software program they are using for this project, and certain matters that must be reconciled internally as between the IRS and the Social Security Administration.  

We have been advised to check back with the IRS audit unit for the FICA Program in July for an update, if they have not sooner contacted us.  We will be doing so, and will update all interested parties at that time.

3. When is the IRS expecting that they will complete their audit and review of the refund claims?

As noted above, the IRS itself has not yet been able to confirm when they will be able to complete their review, in part due to the computer problems and the review of certain internal matters by counsel for both the IRS and the SSA.  We will be checking back with the auditor assigned to SINAI’s claim in July and will update all interested parties at that time.

4. When does the IRS expect that the refund checks will actually be issued?

When SINAI’s claim was originally filed in November, 2010, we were advised by the IRS that they were expecting to process the claims in approximately 120 days following submission.  This estimate has now been substantially modified.  

When we began checking with the IRS on a monthly basis starting in December 2010, we were advised to start following up with the IRS on a monthly basis for continual updates.  We have done so, and from time to time, have updated SINAI and residents regarding the status of the audit, advising that SINAI had cleared the first review process, etc.

However, in a call on April 18th, 2011 with the IRS auditor assigned to SINAI’s FICA claim, we were advised that the payments for the FICA Refund claim might not be issued until April 2012.  

We have provided the IRS with everything needed, the claim has passed its initial audit, and at this time, the IRS auditors themselves are awaiting input from more senior staff members at the IRS as to what the next step in the refund process is going to be.

While this information was contrary to the estimates which were originally provided to us by the IRS (and by us to all of you), there are some positive elements to come out of this news, as follows:

A. The SINAI IRS auditor has advised us that the claims are being processed in the order in which they were filed, and since SINAI was closer to the top of the claims filed, we should be one of the earlier claims processed.  

B. In addition, no matter when filed, a claim can still move up in the rotation, if other claims have difficulties which need to be resolved.  As noted above, SINAI’s claim has already cleared this hurdle, so there is a possibility that SINAI’s claim will be able to move ahead of other refund claims for priority of processing.

C. Despite the frustration of this additional delay, the IRS has confirmed that they will remitting the FICA refund, with interest, and the passage of time will     bring with it additional funds in the form of the accruing interest on the refund.

D. We have been advised that the interest rate to be paid on the refund will be the “individual” refund rate for the residents, which is superior to the “corporate” rate (which is the rate to be applied to the hospital’s “share”).  With interest continuing to accrue, the IRS should remain motivated to get these claims processed and paid.

E. We have been advised that this current delay may, in the end, ultimately accelerate the processing of the claims, for once the IRS works out the final bugs in the computer program which is processing the FICA claims, the auditors hope it will allow them to process the claims quickly; once they are given the final go-ahead to do so.

5. Is the claim in danger of being dismissed or otherwise not paid?

No.  Nothing has happened that in any manner indicates that the claims are not going to be paid (with interest).  As we pointed out in our last update, even the recent Supreme Court decision did nothing to affect the validity of these claims, or to alter the IRS’ intentions to honor the claims.  It appears the delay is purely a function of the noted computer problems, and some internal issues that need to be resolved by the IRS and the SSA, due to the size and scope of this first-of-its-kind program.

6. What is the next step?

We hope to hear from the IRS auditor in the very near future.  If we do not sooner hear, we will be contacting them again in July 2011 and will provide an update for all interested parties.  In the meantime, everyone is encouraged to simply wait to hear from Healthcare Affiliates, Inc., for our last conversation with the IRS was explicit:  They are now expecting a substantial delay in processing these claims, for the reasons set forth above.  We will keep everyone posted as news becomes available.