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Religious Services

Exempt religious services

The following services are generally exempt from FICA:

There is no specific statutory exception under FUTA for services performed by ministers, members of religious orders, or employees of church or qualified church-controlled organizations. Such services are generally exempt from FUTA, however, as services performed for exempt organizations described in § 501(c)(3).

Ministers and members of religious orders

Ministers and members of religious orders may still be subject to SECA, as are employees of a church or qualified church-controlled organization that makes an election to exclude from the FICA tax base remuneration for services performed for the organization.

Church or qualified church-controlled organization election to exclude compensation from the FICA tax base

A church (described in § § 6501(c)(3) and 170(b)(1)(A)(i)) or qualified church-controlled organization that is opposed to the payment of social security taxes for religious reasons may make an election to exclude from the FICA tax base remuneration paid for services performed for the organization. § 3121(w)

Employees who are members of a qualifying religious sect conscientiously opposed to the acceptance of public and private insurance benefits

Effective for wages paid after 1988, employees who are members of a qualifying religious sect that is conscientiously opposed to the acceptance of public and private insurance benefits may apply for exemption from FICA taxes, provided the employer has also applied for and received a similar exemption.

Members of religious orders exempt from FICA and under a vow of poverty

Members of religious orders exempt from FICA and under a vow of poverty may elect coverage by filing a certificate of election with the IRS.

Characteristics of a religious order

The IRS considers the following characteristics in determining whether an organization is a religious order (absence of one or more of the above 6 characteristics is not necessarily determinative in a particular case, but the presence of all of them would be conclusive):

Services performed by a minister

The following rules apply in determining whether services are performed by a minister in the exercise of his ministry:

Service which is NOT performed in the exercise of a ministry is NOT exempt from FICA. If a minister performs service for an organization which is neither a religious organization nor operated as an integral agency of a religious organization, and the service is not performed pursuant to an assignment or designation by a superior, only that service performed in the conduct of religious worship or the ministration of sacerdotal functions is performed in the exercise of a ministry.

Under no circumstances is service performed by a minister as an employee of the United States, a state, a possession of the United States, the District of Columbia, a foreign government, or any political subdivision of any of the foregoing considered to be service in the exercise of a ministry for purposes of FICA, even though such service may involve the ministration of sacerdotal functions or the conduct of worship.

Exempt service performed by a member of a religious order in the exercise of duties required by such order includes all duties required of the member by the order. Service performed outside the order is not exempt if an employer-employee relationship exists between the member and a third-party, even though required to obtain outside employment. However, a member of a religious order who is directed to perform services for an agency of a supervising church or an associated institution of the church is considered to be performing duties which are exempt from FICA regardless of the existence of an employer-employee relationship.