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Student Social Security (FICA) Exclusion
Revised: 10/09
FSS/PPS No. 03.07.01
Issue No. 4
Reviewer: Director of Payroll & Tax Compliance
Effective Date: 07/01/2000 (E3Y)
Review Date: 07/12
01. POLICY STATEMENTS
| 01.01 | This FSS/PPS establishes policy guidelines for the implementation of IRS Revenue Procedure 98-16 which excludes qualified student employees from Social Security and Medicare (FICA) coverage. The Omnibus Appropriations Bill, H.R. 4328 passed by Congress included a provision which permits states to exercise the “student exception” option provided in federal law. The State of Texas filed Modification No. 1496 to the Texas State Social Security Agreement (Section 218 Agreement) to exclude from coverage any service performed after June 30, 2000 if it meets the guidelines outlined in Internal Revenue Code Section 3121(b)(10). This section excepts from the definition of employment any services performed in the employ of a university if the service is performed by a student who is enrolled and regularly attending classes at that university. Remuneration for these services shall not be subject to FICA taxes. |
02. DEFINITIONS
| 02.01 | Student Employees are eligible for the FICA exclusion for wages earned at Texas State if any one of the following enrollment criteria is met:
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| 02.02 | Career Employees who are also students are not eligible even if all other criteria are met. A Career employee is defined as one who is eligible to participate in a retirement program and/or does not require student status as a condition of employment. | ||||||
| 02.03 | Census Date is the date on which “student status” is determined. That date is the 12th class day for Fall and Spring and the 4th class day for Summer Sessions I and II. Mini-session is considered to be part of the Summer Session I enrollment period. | ||||||
| 02.04 | Enrollment Period is defined as the semester in which the student is enrolled and employed at the university. |
03. PROCEDURES FOR GRANTING THE EXCLUSION
Student Status will be determined according to the following procedures:
| 03.01 | General Eligibility – Each eligible student employee will have a historical record of enrollment activity. This will be updated via a program maintained by the Payroll & Tax Compliance Office. The program will be populated initially at the beginning of each semester using actual enrollment data. This will be updated each night until the census date. The information will not be changed after the census date. |
| 03.02 | Prior Semester Exclusion is based on the student’s enrollment status during that previous semester. No action is necessary by the student or the department to accomplish this as it will be determined by the dates in the payment record. |
| 03.03 | Current Semester Exclusion is based on the enrollment status on the census date. The exemption will not be affected by added or dropped classes after the census date. |
| 03.04 | Work Requirement – If the standards of IRS Revenue Procedure 98-16 are met, the amount of remuneration for services performed by the employee, the type of services performed by the employee, the place where the services are performed, and the number of hours worked by the employee are immaterial. |
| 03.05 | Semester Breaks - As defined in IRS Revenue Procedure 98-16, a student will be granted the exclusion during semester breaks provided that period does not exceed thirty-five (35) calendar days. Students who are working, but are not enrolled, during the summer will not be granted the exclusion. This will apply regardless of whether the student was enrolled during the previous semester and expects to return to the university the following semester. |
| 03.06 | Benefit Replacement Pay (BRP) is not impacted by the exclusion because it is part of an employee’s base pay. |
| 03.07 | Refunds - Requests for refunds of Social Security/Medicare (FICA) taxes will be granted only with the approval of the Director of Payroll & Tax Compliance. The student must provide a written request stating the reason(s) the refund should be approved. |
04. MAJOR RESPONSIBILITIES ASSOCIATED WITH THIS PPS
| Major responsibilities for routine assignments associated with this PPS include the following:
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05. CERTIFICATION OF STATEMENT
This FSS/PPS has been approved by the following individuals in their official capacities, and represents FSS policy and procedure from the date of this document until superseded.
Director of Payroll & Tax Compliance, Reviewer
Associate Vice President for Financial Services, Reviewer
Vice President for Finance and Support Services
| Approved: | ____________________________ Reviewer |
| Approved: | ____________________________ Reviewer |
| Approved: | ____________________________ Vice President for Finance and Support Services |