Court Opinion

ID: 182568
Source: CourtListenerOpinion
Date Created: 2011-01-11 15:32:34+00
Date Added: 2024-06-11T17:26:00.224267
License: Public Domain

(Slip Opinion)              OCTOBER TERM, 2010                                       1

                                       Syllabus

         NOTE: Where it is feasible, a syllabus (headnote) will be released, as is
       being done in connection with this case, at the time the opinion is issued.
       The syllabus constitutes no part of the opinion of the Court but has been
       prepared by the Reporter of Decisions for the convenience of the reader.
       See United States v. Detroit Timber & Lumber Co., 200 U. S. 321, 337.

SUPREME COURT OF THE UNITED STATES

                                       Syllabus

   MAYO FOUNDATION FOR MEDICAL EDUCATION 

     AND RESEARCH ET AL. v. UNITED STATES

CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR
                 THE EIGHTH CIRCUIT

  No. 09–837.      Argued November 8, 2010—Decided January 11, 2011
Petitioners (hereinafter Mayo) offer residency programs to doctors who
  have graduated from medical school and seek additional instruction
  in a chosen specialty. Those programs train doctors primarily
  through hands-on experience. Although residents are required to
  take part in formal educational activities, these doctors generally
  spend the bulk of their time—typically 50 to 80 hours a week—caring
  for patients. Mayo pays its residents annual “stipends” of over
  $40,000 and also provides them with health insurance, malpractice
  insurance, and paid vacation time.
     The Federal Insurance Contributions Act (FICA) requires employ
  ees and employers to pay taxes on all “wages” employees receive, 26
  U. S. C. §§3101(a), 3111(a), and defines “wages” to include “all remu
  neration for employment,” §3121(a). FICA defines “employment” as
  “any service . . . performed . . . by an employee for the person employ
  ing him,” §3121(b), but excludes from taxation any “service performed
  in the employ of . . . a school, college, or university . . . if such service
  is performed by a student who is enrolled and regularly attending
  classes at [the school],” §3121(b)(10). Since 1951, the Treasury De
  partment has construed the student exception to exempt from taxa
  tion students who work for their schools “as an incident to and for the
  purpose of pursuing a course of study.” 16 Fed. Reg. 12474. In 2004,
  the Department issued regulations providing that “[t]he services of a
  full-time employee”—which includes an employee normally scheduled
  to work 40 hours or more per week—“are not incident to and for the
  purpose of pursuing a course of study.” 26 CFR §31.3121(b)(10)–
  2(d)(3)(iii). The Department explained that this analysis “is not af
  fected by the fact that the services . . . may have an educational, in
2    MAYO FOUNDATION FOR MEDICAL ED. AND RESEARCH v.
                     UNITED STATES
                        Syllabus

    structional, or training aspect.” Ibid. The rule offers as an example a
    medical resident whose normal schedule requires him to perform ser
    vices 40 or more hours per week, and concludes that the resident is
    not a student.
       Mayo filed suit asserting that this rule was invalid, and the Dis
    trict Court agreed. It found the full-time employee rule inconsistent
    with §3121’s unambiguous text and concluded that the factors gov
    erning this Court’s analysis in National Muffler Dealers Assn., Inc. v.
    United States, 440 U. S. 472, also indicated that the rule was invalid.
    The Eighth Circuit reversed. Applying Chevron U. S. A. Inc. v. Natu
    ral Resources Defense Council, Inc., 467 U. S. 837, the Court of Ap
    peals concluded that the Department’s regulation was a permissible
    interpretation of an ambiguous statute.
Held: The Treasury Department’s full-time employee rule is a reason
 able construction of §3121(b)(10). Pp. 6–15.
    (a) Under Chevron’s two-part framework, the Court first asks
 whether Congress has “directly addressed the precise question at is
 sue.” 467 U. S., at 842-843. Congress has not done so here; the stat
 ute does not define “student” or otherwise attend to the question
 whether medical residents are subject to FICA. Pp. 6–7.
    (b) The parties debate whether the Court should next apply Chev
 ron step two or the multi-factor analysis used to review a tax regula
 tion in National Muffler. Absent a justification to do so, this Court is
 not inclined to apply a less deferential framework to evaluate Treas
 ury Department regulations than it uses to review rules adopted by
 any other agency. The Court has “[r]ecogniz[ed] the importance of
 maintaining a uniform approach to judicial review of administrative
 action.” Dickinson v. Zurko, 527 U. S. 150, 154. And the principles
 underlying Chevron apply with full force in the tax context. Chevron
 recognized that an agency’s power “ ‘to administer a congressionally
 created . . . program necessarily requires the formulation of policy
 and the making of rules to fill any gap left . . . by Congress.’ ” 467
 U. S., at 843. Filling gaps in the Internal Revenue Code plainly re
 quires the Treasury Department to make interpretive choices for
 statutory implementation at least as complex as the ones made by
 other agencies in administering their statutes.
    It is true that the full-time employee rule, like the rule at issue in
 National Muffler, was promulgated under the Department’s general
 authority to “prescribe all needful rules and regulations for the en
 forcement” of the Internal Revenue Code. 26 U. S. C. §7805(a). It is
 also true that this Court, in opinions predating Chevron, stated that
 it owed less deference to a rule adopted under that general grant of
 authority than it would afford rules issued pursuant to more specific
 grants. See Rowan Cos. v. United States, 452 U. S. 247, 253; United
                     Cite as: 562 U. S. ____ (2011)                    3

                                Syllabus

  States v. Vogel Fertilizer Co., 455 U. S. 16, 24. Since then, however,
  the Court has found Chevron deference appropriate “when it appears
  that Congress delegated authority to the agency generally to make
  rules carrying the force of law, and that the agency interpretation
  claiming deference was promulgated in the exercise of that author
  ity.” United States v. Mead Corp., 533 U. S. 218, 226–227. Chevron
  and Mead provide the appropriate framework for evaluating the full
  time employee rule. The Department issued the rule pursuant to an
  explicit authorization to prescribe needful rules and regulations, and
  only after notice-and-comment procedures. The Court has recognized
  these to be good indicators of a rule meriting Chevron deference,
  Mead, 533 U. S., at 229–231. Pp. 7–12.
     (c) The rule easily satisfies Chevron’s second step. Mayo accepts
  the Treasury Department’s determination that an individual may not
  qualify for the student exception unless the educational aspect of his
  relationship with his employer predominates over the service aspect
  of that relationship, but objects to the Department’s conclusion that
  residents working more than 40 hours per week categorically cannot
  satisfy that requirement. Mayo argues that the Treasury Depart
  ment should be required to engage in a case-by-case inquiry into
  what each employee does and why he does it, and that the Depart
  ment has arbitrarily distinguished between hands-on training and
  classroom instruction. But regulation, like legislation, often requires
  drawing lines. The Department reasonably sought to distinguish be
  tween workers who study and students who work. Focusing on the
  hours spent working and those spent in studies is a sensible way to
  accomplish that goal. The Department thus has drawn a distinction
  between education and service, not between classroom instruction
  and hands-on training. The Treasury Department also reasonably
  concluded that its full-time employee rule would “improve adminis
  trability,” 69 Fed. Reg. 76405, and thereby “has avoided the wasteful
  litigation and continuing uncertainty that would inevitably accom
  pany [a] case-by-case approach” like the one Mayo advocates, United
  States v. Correll, 389 U. S. 299, 302. Moreover, the rule reasonably
  takes into account the Social Security Administration’s concern that
  exempting residents from FICA would deprive them and their fami
  lies of vital social security disability and survivorship benefits.
  Pp. 12–15.
568 F. 3d 675, affirmed.

   ROBERTS, C. J., delivered the opinion of the Court, in which all other
Members joined, except KAGAN, J., who took no part in the considera
tion or decision of the case.
                        Cite as: 562 U. S. ____ (2011)                              1

                             Opinion of the Court

     NOTICE: This opinion is subject to formal revision before publication in the
     preliminary print of the United States Reports. Readers are requested to
     notify the Reporter of Decisions, Supreme Court of the United States, Wash
     ington, D. C. 20543, of any typographical or other formal errors, in order
     that corrections may be made before the preliminary print goes to press.

SUPREME COURT OF THE UNITED STATES
                                   _________________

                                   No. 09–837
                                   _________________

  MAYO FOUNDATION FOR MEDICAL EDUCATION

     AND RESEARCH, ET AL., PETITIONERS v. 

              UNITED STATES

 ON WRIT OF CERTIORARI TO THE UNITED STATES COURT OF 

           APPEALS FOR THE EIGHTH CIRCUIT

                               [January 11, 2011] 

  CHIEF JUSTICE ROBERTS delivered the opinion of the
Court.
  Nearly all Americans who work for wages pay taxes on
those wages under the Federal Insurance Contributions
Act (FICA), which Congress enacted to collect funds for
Social Security. The question presented in this case is
whether doctors who serve as medical residents are prop
erly viewed as “student[s]” whose service Congress has
exempted from FICA taxes under 26 U. S. C. §3121(b)(10).
                              I

                             A

  Most doctors who graduate from medical school in the
United States pursue additional education in a specialty to
become board certified to practice in that field. Petitioners
Mayo Foundation for Medical Education and Research,
Mayo Clinic, and the Regents of the University of Minne
sota (collectively Mayo) offer medical residency programs
that provide such instruction. Mayo’s residency programs,
which usually last three to five years, train doctors pri
marily through hands-on experience. Residents often
2   MAYO FOUNDATION FOR MEDICAL ED. AND RESEARCH v.
                    UNITED STATES
                   Opinion of the Court

spend between 50 and 80 hours a week caring for patients,
typically examining and diagnosing them, prescribing
medication, recommending plans of care, and performing
certain procedures. Residents are generally supervised in
this work by more senior residents and by faculty mem
bers known as attending physicians. In 2005, Mayo paid
its residents annual “stipends” ranging between $41,000
and $56,000 and provided them with health insurance,
malpractice insurance, and paid vacation time.
   Mayo residents also take part in “a formal and struc
tured educational program.” Brief for Petitioners 5 (inter
nal quotation marks omitted). Residents are assigned
textbooks and journal articles to read and are expected to
attend weekly lectures and other conferences. Residents
also take written exams and are evaluated by the attend
ing faculty physicians. But the parties do not dispute that
the bulk of residents’ time is spent caring for patients.
                            B
  Through the Social Security Act and related legislation,
Congress has created a comprehensive national insurance
system that provides benefits for retired workers, disabled
workers, unemployed workers, and their families. See
United States v. Lee, 455 U. S. 252, 254, 258, and nn. 1, 7
(1982). Congress funds Social Security by taxing both
employers and employees under FICA on the wages em
ployees earn. See 26 U. S. C. §3101(a) (tax on employees);
§3111(a) (tax on employers).        Congress has defined
“wages” broadly, to encompass “all remuneration for em
ployment.” §3121(a) (2006 ed. and Supp. III). The term
“employment” has a similarly broad reach, extending to
“any service, of whatever nature, performed . . . by an
employee for the person employing him.” §3121(b).
  Congress has, however, exempted certain categories of
service and individuals from FICA’s demands. As relevant
here, Congress has excluded from taxation “service per
                  Cite as: 562 U. S. ____ (2011)            3

                      Opinion of the Court

formed in the employ of . . . a school, college, or university
. . . if such service is performed by a student who is en
rolled and regularly attending classes at such school,
college, or university.” §3121(b)(10) (2006 ed.). The Social
Security Act, which governs workers’ eligibility for bene
fits, contains a corresponding student exception materially
identical to §3121(b)(10). 42 U. S. C. §410(a)(10).
    Since 1951, the Treasury Department has applied the
student exception to exempt from taxation students who
work for their schools “as an incident to and for the pur
pose of pursuing a course of study” there. 16 Fed. Reg.
12474 (adopting Treas. Regs. 127, §408.219(c)); see Treas.
Reg. §31.3121(b)(10)–2(d), 26 CFR §31.3121(b)(10)–2(d)
(2010). Until 2005, the Department determined whether
an individual’s work was “incident to” his studies by per
forming a case-by-case analysis. The primary considera
tions in that analysis were the number of hours worked
and the course load taken. See, e.g., Rev. Rul. 78–17,
1978–1 Cum. Bull. 307 (services of individual “employed
on a full-time basis” with a part-time course load are “not
incident to and for the purpose of pursuing a course of
study”).
    For its part, the Social Security Administration (SSA)
also articulated in its regulations a case-by-case approach
to the corresponding student exception in the Social Secu
rity Act. See 20 CFR §404.1028(c) (1998). The SSA has,
however, “always held that resident physicians are not
students.” SSR 78–3, 1978 Cum. Bull. 55–56. In 1998,
the Court of Appeals for the Eighth Circuit held that the
SSA could not categorically exclude residents from student
status, given that its regulations provided for a case-by
case approach. See Minnesota v. Apfel, 151 F. 3d 742,
747–748. Following that decision, the Internal Revenue
Service received more than 7,000 claims seeking FICA tax
refunds on the ground that medical residents qualified as
students under §3121(b)(10) of the Internal Revenue Code.
4   MAYO FOUNDATION FOR MEDICAL ED. AND RESEARCH v.
                    UNITED STATES
                   Opinion of the Court

568 F. 3d 675, 677 (CA8 2009).
   Facing that flood of claims, the Treasury Department
“determined that it [wa]s necessary to provide additional
clarification of the ter[m]” “student” as used in
§3121(b)(10), particularly with respect to individuals who
perform “services that are in the nature of on the job
training.” 69 Fed. Reg. 8605 (2004). The Department
proposed an amended rule for comment and held a public
hearing on it. See id., at 76405.
   On December 21, 2004, the Department adopted an
amended rule prescribing that an employee’s service is
“incident” to his studies only when “[t]he educational
aspect of the relationship between the employer and the
employee, as compared to the service aspect of the rela
tionship, [is] predominant.” Id., at 76408; Treas. Reg.
§31.3121(b)(10)–2(d)(3)(i), 26 CFR §31.3121(b)(10)–
2(d)(3)(i) (2005). The rule categorically provides that
“[t]he services of a full-time employee”—as defined by the
employer’s policies, but in any event including any em
ployee normally scheduled to work 40 hours or more per
week—“are not incident to and for the purpose of pursuing
a course of study.” 69 Fed. Reg. 76408; Treas. Reg.
§31.3121(b)(10)–2(d)(3)(iii), 26 CFR §31.3121(b)(10)–
2(d)(3)(iii) (the full-time employee rule). The amended
provision clarifies that the Department’s analysis “is not
affected by the fact that the services performed . . . may
have an educational, instructional, or training aspect.”
Ibid. The rule also includes as an example the case of
“Employee E,” who is employed by “University V” as a
medical resident.       69 Fed. Reg. 76409; Treas. Reg.
§31.3121(b)(10)–2(e), 26 CFR §31.3121(b)(10)–2(e) (Exam
ple 4). Because Employee E’s “normal work schedule calls
for [him] to perform services 40 or more hours per week,”
the rule provides that his service is “not incident to and for
the purpose of pursuing a course of study,” and he accord
ingly is not an exempt “student” under §3121(b)(10). 69
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                     Opinion of the Court

Fed. Reg. 76409, 76410; Treas. Reg. §31.3121(b)(10)–2(e),
26 CFR §31.3121(b)(10)–2(e) (Example 4).
                              C
   After the Department promulgated the full-time em
ployee rule, Mayo filed suit seeking a refund of the money
it had withheld and paid on its residents’ stipends during
the second quarter of 2005. 503 F. Supp. 2d 1164, 1166–
1167 (Minn. 2007); Regents of Univ. of Minn. v. United
States, No. 06–5084 (D Minn., Apr. 1, 2008), App. to Pet.
for Cert. C–47a. Mayo asserted that its residents were
exempt under §3121(b)(10) and that the Treasury De
partment’s full-time employee rule was invalid.
   The District Court granted Mayo’s motion for summary
judgment. The court held that the full-time employee rule
is inconsistent with the unambiguous text of §3121, which
the court understood to dictate that “an employee is a
‘student’ so long as the educational aspect of his service
predominates over the service aspect of the relationship
with his employer.” 503 F. Supp. 2d, at 1175. The court
also determined that the factors governing this Court’s
analysis of regulations set forth in National Muffler Deal
ers Assn., Inc. v. United States, 440 U. S. 472 (1979), “indi
cate that the full-time employee exception is invalid.” 503
F. Supp. 2d, at 1176; see App. to Pet. for Cert. C–54a.
   The Government appealed, and the Court of Appeals
reversed. 568 F. 3d 675. Applying our opinion in Chevron
U. S. A. Inc. v. Natural Resources Defense Council, Inc.,
467 U. S. 837 (1984), the Court of Appeals concluded that
“the statute is silent or ambiguous on the question
whether a medical resident working for the school full
time is a ‘student’ ” for purposes of §3121(b)(10), and that
the Department’s amended regulation “is a permissible
interpretation of the statut[e].” 568 F. 3d, at 679–680,
683.
   We granted Mayo’s petition for certiorari. 560 U. S. ___
6   MAYO FOUNDATION FOR MEDICAL ED. AND RESEARCH v.
                    UNITED STATES
                   Opinion of the Court

(2010).
                             II 

                             A

   We begin our analysis with the first step of the two-part
framework announced in Chevron, supra, at 842–843, and
ask whether Congress has “directly addressed the precise
question at issue.” We agree with the Court of Appeals
that Congress has not done so. The statute does not de
fine the term “student,” and does not otherwise attend to
the precise question whether medical residents are subject
to FICA. See 26 U. S. C. §3121(b)(10).
   Mayo nonetheless contends that the Treasury Depart
ment’s full-time employee rule must be rejected under
Chevron step one. Mayo argues that the dictionary defini
tion of “student”—one “who engages in ‘study’ by applying
the mind ‘to the acquisition of learning, whether by means
of books, observation, or experiment’ ”—plainly encom
passes residents. Brief for Petitioners 22 (quoting Oxford
Universal Dictionary 2049–2050 (3d ed. 1955)). And,
Mayo adds, residents are not excluded from that category
by the only limitation on students Congress has imposed
under the statute—that they “be ‘enrolled and regularly
attending classes at [a] school.’ ” Brief for Petitioners 22
(quoting 26 U. S. C. §3121(b)(10)).
   Mayo’s reading does not eliminate the statute’s ambigu
ity as applied to working professionals. In its reply brief,
Mayo acknowledges that a full-time professor taking
evening classes—a person who presumably would satisfy
the statute’s class-enrollment requirement and apply his
mind to learning—could be excluded from the exemption
and taxed because he is not “ ‘predominant[ly]’ ” a student.
Reply Brief for Petitioners 7. Medical residents might
likewise be excluded on the same basis; the statute itself
does not resolve the ambiguity.
   The District Court interpreted §3121(b)(10) as unambig
                  Cite as: 562 U. S. ____ (2011)            7

                      Opinion of the Court

uously foreclosing the Department’s rule by mandating
that an employee be deemed “a ‘student’ so long as the
educational aspect of his service predominates over the
service aspect of the relationship with his employer.” 503
F. Supp. 2d, at 1175. We do not think it possible to glean
so much from the little that §3121 provides. In any event,
the statutory text still would offer no insight into how
Congress intended predominance to be determined or
whether Congress thought that medical residents would
satisfy the requirement.
   To the extent Congress has specifically addressed medi
cal residents in §3121, moreover, it has expressly excluded
these doctors from exemptions they might otherwise in
voke. See 26 U. S. C. §§3121(b)(6)(B), (7)(C)(ii) (excluding
medical residents from exemptions available to employees
of the District of Columbia and the United States). That
choice casts doubt on any claim that Congress specifically
intended to insulate medical residents from FICA’s reach
in the first place.
   In sum, neither the plain text of the statute nor the
District Court’s interpretation of the exemption “speak[s]
with the precision necessary to say definitively whether
[the statute] applies to” medical residents. United States
v. Eurodif S. A., 555 U. S. ___, ___ (2009) (slip op., at 13).
                             B
  In the typical case, such an ambiguity would lead us
inexorably to Chevron step two, under which we may not
disturb an agency rule unless it is “ ‘arbitrary or capricious
in substance, or manifestly contrary to the statute.’ ”
Household Credit Services, Inc. v. Pfennig, 541 U. S. 232,
242 (2004) (quoting United States v. Mead Corp., 533 U. S.
218, 227 (2001)). In this case, however, the parties dis
agree over the proper framework for evaluating an am
biguous provision of the Internal Revenue Code.
  Mayo asks us to apply the multi-factor analysis we used
8   MAYO FOUNDATION FOR MEDICAL ED. AND RESEARCH v.
                    UNITED STATES
                   Opinion of the Court

to review a tax regulation in National Muffler, 440 U. S.
472. 	There we explained:
     “A regulation may have particular force if it is a sub
     stantially contemporaneous construction of the stat
     ute by those presumed to have been aware of congres
     sional intent. If the regulation dates from a later
     period, the manner in which it evolved merits inquiry.
     Other relevant considerations are the length of time
     the regulation has been in effect, the reliance placed
     on it, the consistency of the Commissioner’s interpre
     tation, and the degree of scrutiny Congress has
     devoted to the regulation during subsequent re
     enactments of the statute.” Id., at 477.
The Government, on the other hand, contends that the
National Muffler standard has been superseded by Chev
ron. The sole question for the Court at step two under the
Chevron analysis is “whether the agency’s answer is based
on a permissible construction of the statute.” 467 U. S., at
843.
   Since deciding Chevron, we have cited both National
Muffler and Chevron in our review of Treasury Depart
ment regulations. See, e.g., United States v. Cleveland
Indians Baseball Co., 532 U. S. 200, 219 (2001) (citing
National Muffler); Cottage Savings Assn. v. Commissioner,
499 U. S. 554, 560–561 (1991) (same); United States v.
Boyle, 469 U. S. 241, 246, n. 4 (1985) (citing Chevron); see
also Atlantic Mut. Ins. Co. v. Commissioner, 523 U. S. 382,
387, 389 (1998) (citing Chevron and Cottage Savings).
   Although we have not thus far distinguished between
National Muffler and Chevron, they call for different
analyses of an ambiguous statute. Under National Muf
fler, for example, a court might view an agency’s interpre
tation of a statute with heightened skepticism when it has
not been consistent over time, when it was promulgated
years after the relevant statute was enacted, or because of
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                     Opinion of the Court

the way in which the regulation evolved. 440 U. S., at
477. The District Court in this case cited each of these
factors in rejecting the Treasury Department’s rule, noting
in particular that the regulation had been promulgated
after an adverse judicial decision. See 503 F. Supp. 2d, at
1176; see also Brief for Petitioners 41–44 (relying on the
same considerations).
   Under Chevron, in contrast, deference to an agency’s
interpretation of an ambiguous statute does not turn on
such considerations.      We have repeatedly held that
“[a]gency inconsistency is not a basis for declining to
analyze the agency’s interpretation under the Chevron
framework.” National Cable & Telecommunications Assn.
v. Brand X Internet Services, 545 U. S. 967, 981 (2005);
accord, Eurodif S. A., supra, at ___ (slip op., at 10). We
have instructed that “neither antiquity nor contempora
neity with [a] statute is a condition of [a regulation’s]
validity.” Smiley v. Citibank (South Dakota), N. A., 517
U. S. 735, 740 (1996). And we have found it immaterial to
our analysis that a “regulation was prompted by litiga
tion.” Id., at 741. Indeed, in United Dominion Industries,
Inc. v. United States, 532 U. S. 822, 838 (2001), we ex
pressly invited the Treasury Department to “amend its
regulations” if troubled by the consequences of our resolu
tion of the case.
   Aside from our past citation of National Muffler, Mayo
has not advanced any justification for applying a less
deferential standard of review to Treasury Department
regulations than we apply to the rules of any other agency.
In the absence of such justification, we are not inclined
to carve out an approach to administrative review good
for tax law only. To the contrary, we have expressly
“[r]ecogniz[ed] the importance of maintaining a uniform
approach to judicial review of administrative action.”
Dickinson v. Zurko, 527 U. S. 150, 154 (1999). See, e.g.,
Skinner v. Mid-America Pipeline Co., 490 U. S. 212, 222–
10 MAYO FOUNDATION FOR MEDICAL ED. AND RESEARCH v.
                   UNITED STATES
                  Opinion of the Court

223 (1989) (declining to apply “a different and stricter
nondelegation doctrine in cases where Congress delegates
discretionary authority to the Executive under its taxing
power”).
   The principles underlying our decision in Chevron apply
with full force in the tax context. Chevron recognized that
“[t]he power of an administrative agency to administer a
congressionally created . . . program necessarily requires
the formulation of policy and the making of rules to fill
any gap left, implicitly or explicitly, by Congress.” 467
U. S., at 843 (internal quotation marks omitted). It ac
knowledged that the formulation of that policy might
require “more than ordinary knowledge respecting the
matters subjected to agency regulations.” Id., at 844
(internal quotation marks omitted). Filling gaps in the
Internal Revenue Code plainly requires the Treasury
Department to make interpretive choices for statutory
implementation at least as complex as the ones other
agencies must make in administering their statutes. Cf.
Bob Jones Univ. v. United States, 461 U. S. 574, 596
(1983) (“[I]n an area as complex as the tax system, the
agency Congress vests with administrative responsibility
must be able to exercise its authority to meet changing
conditions and new problems”). We see no reason why our
review of tax regulations should not be guided by agency
expertise pursuant to Chevron to the same extent as our
review of other regulations.
   As one of Mayo’s amici points out, however, both the
full-time employee rule and the rule at issue in National
Muffler were promulgated pursuant to the Treasury De
partment’s general authority under 26 U. S. C. §7805(a) to
“prescribe all needful rules and regulations for the en
forcement” of the Internal Revenue Code. See Brief for
Carlton M. Smith 4–7. In two decisions predating Chev
ron, this Court stated that “we owe the [Treasury Depart
ment’s] interpretation less deference” when it is contained
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                     Opinion of the Court

in a rule adopted under that “general authority” than
when it is “issued under a specific grant of authority to
define a statutory term or prescribe a method of executing
a statutory provision.” Rowan Cos. v. United States, 452
U. S. 247, 253 (1981); United States v. Vogel Fertilizer Co.,
455 U. S. 16, 24 (1982) (quoting Rowan).
   Since Rowan and Vogel were decided, however, the
administrative landscape has changed significantly. We
have held that Chevron deference is appropriate “when it
appears that Congress delegated authority to the agency
generally to make rules carrying the force of law, and that
the agency interpretation claiming deference was promul
gated in the exercise of that authority.” Mead, 533 U. S.,
at 226–227. Our inquiry in that regard does not turn on
whether Congress’s delegation of authority was general or
specific. For example, in National Cable & Telecommuni
cations Assn., supra, we held that the Federal Communi
cations Commission was delegated “the authority to prom
ulgate binding legal rules” entitled to Chevron deference
under statutes that gave the Commission “the authority to
‘execute and enforce,’ ” and “to ‘prescribe such rules and
regulations as may be necessary in the public interest to
carry out the provisions’ of,” the Communications Act of
1934. 545 U. S., at 980–981 (quoting 47 U. S. C. §§151,
201(b)). See also Sullivan v. Everhart, 494 U. S. 83, 87,
88–89 (1990) (applying Chevron deference to rule promul
gated pursuant to delegation of “general authority to
‘make rules and regulations and to establish procedures,
not inconsistent with the provisions of this subchapter,
which are necessary or appropriate to carry out such
provisions’ ” (quoting 42 U. S. C. §405(a) (1982 ed.))).
   We believe Chevron and Mead, rather than National
Muffler and Rowan, provide the appropriate framework
for evaluating the full-time employee rule. The Depart
ment issued the full-time employee rule pursuant to the
explicit authorization to “prescribe all needful rules and
12 MAYO FOUNDATION FOR MEDICAL ED. AND RESEARCH v.
                   UNITED STATES
                  Opinion of the Court

regulations for the enforcement” of the Internal Revenue
Code. 26 U. S. C. §7805(a). We have found such “express
congressional authorizations to engage in the process of
rulemaking” to be “a very good indicator of delegation
meriting Chevron treatment.” Mead, supra, at 229. The
Department issued the full-time employee rule only after
notice-and-comment procedures, 69 Fed. Reg. 76405, again
a consideration identified in our precedents as a “signifi
cant” sign that a rule merits Chevron deference. Mead,
supra, at 230–231; see, e.g., Long Island Care at Home,
Ltd. v. Coke, 551 U. S. 158, 173–174 (2007).
  We have explained that “the ultimate question is
whether Congress would have intended, and expected,
courts to treat [the regulation] as within, or outside, its
delegation to the agency of ‘gap-filling’ authority.” Id., at
173 (emphasis deleted). In the Long Island Care case, we
found that Chevron provided the appropriate standard of
review “[w]here an agency rule sets forth important indi
vidual rights and duties, where the agency focuses fully
and directly upon the issue, where the agency uses full
notice-and-comment procedures to promulgate a rule,
[and] where the resulting rule falls within the statutory
grant of authority.” 551 U. S., at 173. These same consid
erations point to the same result here. This case falls
squarely within the bounds of, and is properly analyzed
under, Chevron and Mead.
                              C
   The full-time employee rule easily satisfies the second
step of Chevron, which asks whether the Department’s
rule is a “reasonable interpretation” of the enacted text.
467 U. S., at 844. To begin, Mayo accepts that “the ‘educa
tional aspect of the relationship between the employer and
the employee, as compared to the service aspect of the
relationship, [must] be predominant’ ” in order for an
individual to qualify for the exemption. Reply Brief for
                 Cite as: 562 U. S. ____ (2011)          13

                     Opinion of the Court

Petitioners 6–7 (quoting Treas. Reg. §31.3121(b)(10)–
2(d)(3)(i), 26 CFR §31.3121(b)(10)–2(d)(3)(i)). Mayo ob
jects, however, to the Department’s conclusion that resi
dents who work more than 40 hours per week categorically
cannot satisfy that requirement. Because residents’ em
ployment is itself educational, Mayo argues, the hours a
resident spends working make him “more of a student, not
less of one.” Reply Brief for Petitioners 15, n. 3 (emphasis
deleted). Mayo contends that the Treasury Department
should be required to engage in a case-by-case inquiry into
“what [each] employee does [in his service] and why” he
does it. Id., at 7. Mayo also objects that the Department
has drawn an arbitrary distinction between “hands-on
training” and “classroom instruction.” Brief for Petition
ers 35.
   We disagree. Regulation, like legislation, often requires
drawing lines. Mayo does not dispute that the Treasury
Department reasonably sought a way to distinguish be
tween workers who study and students who work, see IRS
Letter Ruling 9332005 (May 3, 1993). Focusing on the
hours an individual works and the hours he spends in
studies is a perfectly sensible way of accomplishing that
goal. The Department explained that an individual’s
service and his “course of study are separate and distinct
activities” in “the vast majority of cases,” and reasoned
that “[e]mployees who are working enough hours to be
considered full-time employees . . . have filled the conven
tional measure of available time with work, and not
study.” 69 Fed. Reg. 8607. The Department thus did not
distinguish classroom education from clinical training but
rather education from service. The Department reasona
bly concluded that its full-time employee rule would “im
prove administrability,” id., at 76405, and it thereby “has
avoided the wasteful litigation and continuing uncertainty
that would inevitably accompany any purely case-by-case
approach” like the one Mayo advocates, United States v.
14 MAYO FOUNDATION FOR MEDICAL ED. AND RESEARCH v.
                   UNITED STATES
                  Opinion of the Court

Correll, 389 U. S. 299, 302 (1967).
  As the Treasury Department has explained, moreover,
the full-time employee rule has more to recommend it
than administrative convenience. The Department rea
sonably determined that taxing residents under FICA
would further the purpose of the Social Security Act and
comport with this Court’s precedent. As the Treasury
Department appreciated, this Court has understood the
terms of the Social Security Act to “ ‘import a breadth of
coverage,’ ” 69 Fed. Reg. 8605 (quoting Social Security Bd.
v. Nierotko, 327 U. S. 358, 365 (1946)), and we have in
structed that “exemptions from taxation are to be con
strued narrowly,” Bingler v. Johnson, 394 U. S. 741, 752
(1969). Although Mayo contends that medical residents
have not yet begun their “working lives” because they are
not “fully trained,” Reply Brief for Petitioners 13 (internal
quotation marks omitted), the Department certainly did
not act irrationally in concluding that these doctors—“who
work long hours, serve as highly skilled professionals, and
typically share some or all of the terms of employment of
career employees”—are the kind of workers that Congress
intended to both contribute to and benefit from the Social
Security system. 69 Fed. Reg. 8608.
  The Department’s rule takes into account the SSA’s
concern that exempting residents from FICA would de
prive residents and their families of vital disability and
survivorship benefits that Social Security provides. Id., at
8605. Mayo wonders whether the full-time employee rule
will result in residents being taxed under FICA but denied
coverage by the SSA. The Government informs us, how
ever, that the SSA continues to adhere to its longstanding
position that medical residents are not students and thus
remain eligible for coverage. Brief for United States 29–
30; Tr. of Oral Arg. 33–34.
                 Cite as: 562 U. S. ____ (2011) 
                 15

                     Opinion of the Court 

                       *    *     * 

   We do not doubt that Mayo’s residents are engaged in a
valuable educational pursuit or that they are students of
their craft. The question whether they are “students” for
purposes of §3121, however, is a different matter. Because
it is one to which Congress has not directly spoken, and
because the Treasury Department’s rule is a reasonable
construction of what Congress has said, the judgment of
the Court of Appeals must be affirmed.

                                                    It is so ordered.

  JUSTICE KAGAN took no part in the consideration or
decision of this case.