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Thought this board would be the best place to ask.

I may very well be receiving a refund from the IRS for FICA taxes paid 1996-2002.

On the consent form (to allow my former employer to file for the refund) is the following statement:

"I understand that the amounts listed above are not the precise amount of the potential refund. The precise amount will not be known until the IRS has approved the refund claims and added the interest due, if any."

I am curious - does the IRS pay you interest on your money that they having been holding onto for almost 15 years? If so, what is the interest rate they pay? Is it the same each year or might it fluctuate with say the treasury notes?
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does the IRS pay you interest on your money that they having been holding onto for almost 15 years? If so, what is the interest rate they pay?

They pay the same amount on overpayments that they charge for underpayments (for individuals). The rate adjusts quarterly.

Ordinarily a refund on the periods you mention would be barred by time. Do you have more information about why you think you would be getting a refund?

Phil
Rule Your Retirement Home Fool
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I am curious - does the IRS pay you interest on your money that they having been holding onto for almost 15 years? If so, what is the interest rate they pay? Is it the same each year or might it fluctuate with say the treasury notes?
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Generally, yes, they pay you interest. But also, the statute of limitations runs after 3 years.

FICA tax adjustments -whether assessments or refunds - are generally interest-free. This is in Code Section 6413, and is an exception to the general rules about interest on refunds or assessments. Now if you get an assessment and don't pay it, then interest starts running, at some point, which I THINK is the due date for the employer's quarterly return (Form 941) for that quarter.

Was your employer involved in a long-running dispute with the IRS? (Involving years of appeals, where they extended the statute, perhaps?) Otherwise there wouldn't be that many open years. Now if the employer hadn't filed returns, and you owed the money, that would be another matter. They could go back forever. (But still wouldn't charge interest.)

Bill
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Thank you both for your answers.

It looks like I will just have to wait and see if any interest will be paid.

To answer the questions you posed, here is a copy of the IRS release:

IR-2010-25, March 2, 2010
WASHINGTON — The Internal Revenue Service has made an administrative
determination to accept the position that medical residents are excepted from FICA taxes based on the student exception for tax periods ending before April 1, 2005, when new IRS regulations went into effect.
The IRS will, within 90 days, begin contacting hospitals, universities and medical residents who filed FICA (Social Security and Medicare tax) refund claims for these periods with more information and procedures. Employers and individuals with pending claims do not need to take any action at this time.

I had no idea that this FICA tax issue was even being debated, let alone apparently being decided in my favor. An old friend recently suggested that I look into it. I contacted my former employer and sure enough they they were on top of the situation and had filed the appropriate paperwork thus far.
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I had no idea that this FICA tax issue was even being debated, let alone apparently being decided in my favor. An old friend recently suggested that I look into it. I contacted my former employer and sure enough they they were on top of the situation and had filed the appropriate paperwork thus far.

IIRC in this type of case any refund of the employee's portion flows through the employer, and the employer has to make certain statements about that refund. Is this the matter addressed in the "consent" you mentioned in the OP?

Phil
Rule Your Retirement Home Fool
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That's basically my understanding. I contacted my CPA when I first heard about this. He mentioned something about a three year window in which to file for a refund. He said that it was too late for me to file individually, but that I should contact my former employer as they may have applied on my behalf. They are requesting that I sign the consent form to collect the refund on my behalf.
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