THIS ARTICLE IS INTENDED TO SUPPORT THE READER’S KNOWLEDGE CONCERNING A PARTICULAR LEGAL QUESTION. IT IS NOT LEGAL ADVICE. IF THE READER SEEKS LEGAL ADVICE CONCERNING HIS OR HER PARTICULAR SITUATION, HE OR SHE SHOULD SEEK OUT AN ATTORNEY IN A LAWYER CLIENT RELATIONSHIP.

Any Member Of A Recognized Religious Sect Or Division Thereof Who Is An Adherent Of Established Tenets Or Teachings Of Such Sect Or Division , By Reason Of Which Such Member Is Conscientiously Opposed To Acceptance Of The Benefits Of Any Private Or Public Insurance Which Makes Payments In The Event of Death, Disability, Old-Age, Or Retirement Or Makes Payments Toward The Cost Of, Or Provides Services For, Medical Care , Including The Benefits Of Any Insurance System Established By The Social Security Act, Is Exempt From Social Security Taxes Upon An Approved Application To The Commissioner .

The Social Security Act and its subsequent amendments provide a system of old age and unemployment benefits. See 26 U.S.C. § 3101 et seq. These benefits are supported by various taxes, including, the Federal Insurance Contributions Act (FICA) and the Federal Unemployment Tax Act (FUTA) tax. FICA is a tax paid in part by employees through withholding, See 26 U.S.C. § 3101, and in part by employers through an excise tax. See 26 U.S.C. § 3111. FUTA is an excise tax imposed only on employers. See 26 U.S.C. § 3301. Both taxes are based on the wages paid to employees, and the record keeping and transmittal of funds are obligations of the employer. Only FICA is collected from self-employed individuals. See U.S. v. Lee, 102 S. Ct. 1051 , 55 U.S. 252 (1982) Footnote 1.

Certain types of services relating to members of religious orders may be considered a self employed trade or business even though they are performed by employees See 20 CFR § 404.1068(a) . If you are a member of a religious order who has not taken a vow of poverty, the services or work you perform in the exercise of your ministry or duties required by the order are considered a self employed trade or business See 20 CFR § 404.1071. (a) (e)

Similarly to a member of a religious order who has taken a vow of poverty concerning the self employed work or services he or she performs in the exercise of the ministry or duties required by the order, any individual may file an application …..for an exemption from the tax …..if he is a member of a recognized religious sect or division thereof and is an adherent of established tenets or teachings of such sect or division by reason of which he is conscientiously opposed to acceptance of the benefits of any private or public insurance which makes payments in the event of death, disability, old-age, or retirement or makes payments toward the cost of, or provides services for, medical care (including the benefits of any insurance system established by the Social Security Act)

Such exemption may be granted only if the application contains or is accompanied by—

(A)

such evidence of such individual’s membership in, and adherence to the tenets or teachings of, the sect or division thereof as the Secretary may require for purposes of determining such individual’s compliance with the preceding sentence, and

his waiver of all benefits and other payments under titles II and XVIII of the Social Security Act on the basis of his wages and self employment income as well as all such benefits and other payments to him on the basis of the wages and self employment income of any other person, and only if the Commissioner of Social Security finds that—

(C)

such sect or division thereof has the established tenets or teachings referred to in the preceding sentence,

(D)

it is the practice, and has been for a period of time which he deems to be substantial, for members of such sect or division thereof to make provision for their dependent members which in his judgment is reasonable in view of their general level of living, and

(E)

such sect or division thereof has been in existence at all times since December 31, 1950.

An exemption may not be granted to any individual if any benefit or other payment referred to in subparagraph (B) became payable (or, but for section 203 or 222(b) of the Social Security Act , would have become payable) at or before the time of the filing of such waiver.

See 26 U.S. Code 1402 (g) Members of certain religious faiths (1) Exemption

The U.S. Supreme Court has that there are religious communities, such as the Amish , having their own “welfare” system, based on a religious believe that is it sinful not to provide for their own elderly and needy and therefore they have a religious opposition to the national social security system. See U.S. v. Lee, 102 S. Ct. 1051 , 55 U.S. 252 (1982). The Amish believe that a scriptural basis for this belief is: “But if any provide not for his own, and specially for those of his own house, he hath denied the faith, and is worse than an infidel.” (1 Timothy 5:8 KJV) See U.S. v. Lee, 102 S. Ct. 1051 , 55 U.S. 252 (1982) Footnote 3

The Court noted that the exemption from social security taxes provided under 26 U.S.C. 1402(g) is available only to such individuals who are deemed self-employed religious sect or division thereof members in the exercise of the duties required by their religious community concerning its own “welfare” system. See U.S. v. Lee, 102 S. Ct. 1051 , 55 U.S. 252 (1982) . The Court’s holding was based on both the exemption statute for such self-employed and the First Amendment prohibition of unconstitutional infringements upon the free exercise of religion.

While confining the § 1402(g) exemption to such deemed self-employed members of a religious sect or division thereof provided for a narrow category which was readily identifiable , the Court noted that such self-employed persons in a religious community having its own “welfare” system are distinguishable from the generality of wage earners employed by others. See U.S. v. Lee, 102 S. Ct. 1051 , 55 U.S. 252 (1982)

Accordingly, in any case where—

(1)

an employer (or, if the employer is a partnership, each partner therein) is a member of a recognized religious sect or division thereof described in section 1402(g)(1) and an adherent of established tenets or teachings of such sect or division as described in such section, and has filed and had approved under subsection (b) an application (in such form and manner, and with such official, as may be prescribed by such regulations) for an exemption from the taxes imposed by section 3111, and

(2)

an employee of such employer who is also a member of such a religious sect or division and an adherent of its established tenets or teachings has filed and had approved under subsection (b) an identical application for exemption from the taxes imposed by section 3101,

such employer shall be exempt from the taxes imposed by section 3111 with respect to wages paid to each of the employees thereof who meets the requirements of paragraph (2) and each such employee shall be exempt from the taxes imposed by section 3101 with respect to such wages paid to him by such employer.

(b) Approval of application

An application for exemption filed by an employer (or a partner) under subsection (a)(1) or by an employee under subsection (a)(2) shall be approved only if—

(1)

such application contains or is accompanied by the evidence described in section 1402(g)(1)(A) and a waiver described in section 1402(g)(1)(B),

(2)

the Commissioner of Social Security makes the findings (with respect to such sect or division) described in section 1402(g)(1)(C), (D), and (E), and

(3)

no benefit or other payment referred to in section 1402(g)(1)(B) became payable (or, but for section 203 of the Social Security Act , would have become payable) to the individual filing the application at or before the time of such filing.

An exemption granted under this section to any employer with respect to wages paid to any of the employees thereof, or granted to any such employee , shall apply with respect to wages paid by such employer during the period—

(1)

commencing with the first day of the first calendar quarter, after the quarter in which such application is filed, throughout which such employer (or, if the employer is a partnership, each partner therein) or employee meets the applicable requirements specified in subsections (a) and (b), and

(2)

ending with the last day of the calendar quarter preceding the first calendar quarter thereafter in which (A) such employer (or, if the employer is a partnership, any partner therein) or the employee involved does not meet the applicable requirements of subsection (a), or (B) the sect or division thereof of which such employer (or, if the employer is a partnership, any partner therein) or employee is a member is found by the Commissioner of Social Security to have ceased to meet the requirements of subsection (b)(2).

See 26 U.S. Code § 3127 (a) – Exemption for employers and their employees where both are members of religious faiths opposed to participation in Social Security Act programs