TN 30 (08-05)

Citations:

Social Security Act, Section 210(a)(8)(B) ;

Regulation No.4, Sec. 404.1026

A. Policy

1. General

Any church or qualified church-controlled organization opposed to the payment of Social Security and Medicare taxes for religious reasons can elect to exclude the services of its employees from employment.

2. Filing an Exemption

Churches and church organizations make this election by filing two copies of IRS Form 8274 http://www.irs.gov/pub/irs-pdf/f8274.pdf (Certification by Churches and Qualified Church - Controlled Organizations Electing Exemption from Employer Social Security and Medicare Taxes). An organization in existence on 09/30/84 had until 10/31/84 to elect exemption from participation. An organization created after 09/30/84 must file Form 8274 before the first date on which a quarterly employment tax return is due.

3. Employee Coverage

Where the exclusion is applicable, the services of the employees affected are treated as services in a trade or business. All remuneration $100 or more in a tax year are covered and must be reported as self-employment income. (See RS 01802.234 for a guide to reporting SE taxes and when such exclusions may apply.)

4. Effective Date of Exclusion

This exemption, when approved, applies to all services performed after 1983.

B. Definitions

1. Church

The term church includes conventions or associations of churches. It also includes any elementary or secondary school that is controlled, operated, or principally supported by a church or by a convention or association of churches.

2. Qualified church-controlled organization

Any church-controlled organization exempt from income tax under section 501(c)(3) of the Internal Revenue Code, but does not include an organization which:

• offers goods, services or facilities for sale to the general public, other than on an incidental basis or for a nominal charge, AND

• normally receives more than 25% of its support from governmental sources and/or receipts from admissions, sales of merchandise, services or facilities in related trade or business activities.

C. Reference

RS 01901.540, See for treatment before 1984.