IRS Exempts HSA Workers; Nixes Social Security Taxes

As the result of a recent Internal Revenue Service exemption, student employees of Harvard Student Agencies (HSA) will no longer have social security taxes taken from their paychecks.

The decision will save the en-trepreneurial organization $7000 in social security taxes in the upcoming quarter. It will also save student employees $6500 in taxes.

So far this year, HSA has paid $28,000 in taxes while its 1200 student employees have paid $26,800 dollars.

Retroactive?

The IRS has not yet ruled on whether its decision, made last Monday, is retroactive. Harold Rosenwald '27, legal counsel to HAS, said yesterday that he expects that the IRS will make its decision retroactive.

He said he would request the tax refund by mail, explaining that "there is no real leagl" issue." "We are entitled to retroactive money paid under a mistake of law," he said.

If the decision is favorable, students will get back the money they paid in social security taxes, explained Hope B. Spruance, general manager of HAS. She said she expects a ruling in Febraury.

HAS is a non-profit, student-run corporation that provides services ranging from refrigerator rentals to publishing travel guidebooks.

All HSA employees used to be exempt from social security taxes under a general exemption for non-profit organizations, said Spruance. But an amendment which went into effect this year removed that loophole, she added.

Since the change. HSA student employees have paid nearly seven percent of their wages in social security taxes, provided they earned more than $100 for the year. HSA paid seven percent of their payroll in matching social security taxes.

Full-time students employed by their school or a closely associated organization have always been exempt from social-security taxes, said Andrea S. Tucker of the IRS. But in the past year. HSA has had to prove its close ties to Harvard in order to get the student exemption.

Rosenwald said HSA fits this criterion because students make-up one-third of its board of directors, while Harvard faculty and staff constitute another third. In addition. HSA's non-student employees are technically employees of the University.

HSA formally requested an exemption in May, Rosenwald said.

Other organizations connected to the school may also be exempt under this new ruling. The Harvard Crimson Business Manager. Jonathan M. Weintraub '85, said that The Crimson might try to get the exemption. He estimated that the daily newspaper could save up to $1400 in taxes.

With the additional funds HSA may buy a computer system to handle its operation. Spruance said. She added that it might also increase wages although she did not say by how much.HOPE B. SPRUANE