The Internal Revenue Code requires universities to withhold Social Security taxes when a student is not regularly attending classes. Because of the ambiguity of the law, the UI has not been withholding Social Security taxes from student wages/salary when the students have not been registered. The IRS recently clarified the law, and the UI will begin withholding Social Security taxes with the 1994 summer session II for those students working, but not regularly attending classes. The university will consider a student regularly attending classes if the student is registered for any number of hours or units, including 0 units. All students - graduate and undergraduate - who are employed as assistants or as hourly employees will have Social Security taxes withheld automatically during terms (semester or summer session) or portion of terms when they are not registered. Students who are not registered as of the last day of the official postregistration period for any term (June 21 for summer session II and Sept. 9 for fall semester) will have Social Security taxes withheld. A student's withholding status will change according to registration status; i.e. a student who withdraws will have withholding started beginning with the first payroll calculation performed following withdrawal. Social Security taxes must be withheld for a full pay period. Therefore, if a student registers after the beginning of a pay period, Social Security taxes will be withheld for the full pay period and not a pro rata portion of the pay period. There are no retroactive provisions; therefore, once the Social Security taxes have been withheld, no refunds will be made. Employment during the normal breaks in the academic year, Aug. 21 through May 20, and summer school breaks will be considered covered by the students current registration status or by the status of the previous term. Students who take less than a full -time load will be reviewed to make sure that their employment remains incidental to their student status. In general, though, the students will be exempt from the Social Security taxes as long as the student is being paid from the Student (S) or the Graduate payroll (G or H) and his or her appointment is coded as a student (G or U). A graduate assistant registered for 0 units while working on a dissertation will be considered exempt from taxes. The percent deducted for the Social Security taxes is 7.65 percent (6.2 percent for OASDI and 1.45 percent for Medicare). Questions regarding students on the G or H payroll should be directed to the Office of Academic Human Resources, 333-2759 or 333-6747; questions about the S payroll should be directed to the Office of Student Financial Aid, 333-0600.