I am an American with residency in Italy(am here more than 300 days /year) working for a US company based in California, running a study abroad program for US universities. I pay Medicare and Social Security taxes in the US but am exempt for Federal taxes(which I have withheld) and then get back at tax time. I have looked over a document regarding the tax agreement between the US and Italy, but was not able to make complete sense of it.

Main issue is: Am I responsible for taxes in Italy? Technically I do not pay taxes(other than Social Security and Medicare), since I get it all back since I earn less than the established amount, I think around 80,000 USD/year.

Any help, or info on some sources to learn more would be appreciated.

This is really an Italian tax question and you should ask an Italian tax advisor. Having said that, if you are resident in Italy and performing services there, you likely owe taxes in Italy.