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Release: Immediate

More than 1,100 UI students to receive payroll tax refunds

IOWA CITY, Iowa -- More than 1,100 University of Iowa student employees will soon receive refund checks for FICA (Social Security) payroll taxes paid during the first two months of 1998. The UI will be issuing more than $52,000 in refunds. Students who are due refunds should receive their checks some time next week.

The refunds stem from new guidelines issued earlier this year by the Internal Revenue Service. Under the new guidelines, most students who are enrolled at least half time are exempt from having FICA taxes withheld from wages earned through university employment. The usual employee contribution to FICA is 7.65 percent of the total paycheck.

The new IRS guidelines and refunds affect only a minority of the UI's student employees. Refunds will go to undergraduate students who worked more than 20 hours a week and to graduate and professional students who worked more than 30 hours a week. Most students working less than that were exempt from the FICA payroll taxes under the old guidelines and will remain exempt under the new guidelines as well.

The FICA payroll exemption does not apply to wages earned by students through non-university employment.

Additional refunds may be issued to students who paid FICA taxes for university work dating back to February of 1996, the date when the old FICA guidelines became effective. But UI officials warn that it could take up to three years to obtain that money from the IRS. There's also the possibility that the IRS may deny the UI's request for refunds for that time period.

Students who may be due a FICA refund for calendar years 1996 and 1997 should keep the Registrar's office apprised of any changes in address. The UI will be sending letters to those students asking for their permission to apply for a FICA refund for those years. Changes of address can be sent to: Office of the Registrar, 1 Jessup Hall, University of Iowa, Iowa City, IA 52242.