TN 30 (08-05)

Citations:

Internal Revenue Code, Section 3127;

Social Security Act, Section 202(v);

Regulations No. 4, Sec 404.1039

A. Policy

1. Tax Exemption

Wages paid after 12/31/88 are not subject to Social Security and Medicare taxes when paid to an employee who is a member of a given religious group by an employer who is a member of the same religious group. Both must have applications for exemptions from Social Security and Medicare taxation approved by the Internal Revenue Service.

For purposes of this exemption, the employer is:

• a self-employed individual; or

• a partnership provided all partners have approved exemptions; or

• effective with remuneration paid after 12/31/89, a church or qualified church-controlled organization if the organization has in effect an exemption described in RS 01901.640.

2. Church Employee

The church employee must obtain an exemption using the same procedure followed by the self-employed individual in the reference below.

3. Waiver of Benefits

As a condition of approval, the applicant must waive the right of anyone to receive benefits under title II and title XVIII of the Act based on the applicant's earnings record.

B. Reference

RS 01802.270, For comparable self-employment provisions and a definition of “religious group.”