Graduate employees got an end-of-the-year present from the IRS, when the Dec. 21 Federal Register published final rules governing student employee Social Security tax, or FICA, exceptions. For months, one draft of the rules had bounced out the student exception graduate employees have always enjoyed. The IRS was intent on changing the rules to collect the tax from medical residents, but, to the dismay of graduate employees and institutions alike, its draft language also had folded in the student workers.

The AFT and other organizations presented legal analysis and testimony against that change, however, and they prevailed.

"The overarching principle of the new regulations," says AFT legal department senior associate Teresa Ellis, is "as it had been in the old regulations. That is, in order to be eligible for the student FICA exception, the employment must be 'incident to and for the purpose of pursuing a course of study.'" This provides the flexibility that protects employees of an education institution.

Earlier last year, graduate employees were up in arms over the possible change. Scott Henkel, president of the Graduate Employees Union/AFT at Michigan State University, spoke at an IRS hearing and David Hecker, president of the Michigan Federation of Teachers & School Related Personnel, helped him arrange a meeting with U.S. Rep. Sander M. Levin (D-Mich.), in which he asked the congressman to protect graduate employees from a provision that was never meant to apply to them in the first place.

Then, Levin and a colleague, Rep. Jim Ramstad (R-Minn.), nudged U.S. Treasury secretary John Snow with a letter expressing "grave concern and disappointment" over regulations that would have affected graduate employees who typically scrape together a subsistence during their time on campus and could hardly afford the hundreds of dollars that could have been levied had the proposal passed.

Additionally, the IRS dropped its requirement from the final rules that the student employee be enrolled at least half-time to be eligible for the exception.