20 CFR 404.1004(a)

SSR 82-44c

U.S. v. Lee, 102 S. Ct. 1051 (1982)

The appellee, a member of the Old Order Amish who employed several other Amish to work on his farm and in his carpentry shop, failed to withhold Social Security taxes from the wages of his employees or to pay the employer's share of those taxes. After the Internal Revenue Service assessed an amount for unpaid taxes against him, the appellee made a partial payment and sued for a refund, claiming that the imposition of Social Security taxes violated the First Amendment rights of both he and his employees to the free exercise of their religion. Relying upon both the First Amendment and 26 U.S.C. 1402(g), which provides an exemption for self-employed Amish, the district court held the statutes requiring the claimant to pay Social Security taxes to be unconstitutional. On appeal, the Supreme Court noted that the exemption provided by 26 U.S.C. 1402(g) is available only to self-employed individuals and does not apply to employers or employees. As to the constitutional claim, the court held that, since accommodating the Amish beliefs under the circumstances would unduly interfere with the fulfillment of the overriding governmental interest in assuring mandatory and continuous participation in and contribution to the Social Security system, the limitation on religious liberty involved here was justified. Consequently, in reversing the district court, the Supreme Court held that, unless Congress provides otherwise, the tax imposed on employers to support the Social Security system must be uniformly applicable to all.

BURGER, Chief Justice:

We noted probable jurisdiction to determine whether imposition of social security taxes is unconstitutional as applied to persons who object on religious grounds to receipt of public insurance benefits and to payment of taxes to support public insurance funds. -- U.S. -- (1981). The District Court concluded that the Free Exercise Clause prohibits forced payment of social security taxes when payment of taxes and receipt of benefits violates the taxpayer's religion. We reverse.


Appellee, a member of the Old Order Amish, is a self-employed farmer and carpenter. From 1970 to 1977, appellee employed several other Amish to work on his farm and in his carpentry shop. He failed to file the quarterly social security tax returns required of employers, withhold social security tax from his employees or pay the employer's share of social security taxes.[1]

In 1978, the Internal Revenue Service assessed appellee in excess of $27,000 for unpaid employment taxes; he paid $91 -- the amount owed for the first quarter of 1973 -- and then sued in the United States District Court for the Western District of Pennsylvania for a refund, claiming that imposition of the social security taxes violated his First Amendment Free Exercise rights and those of his Amish employees.[2]

The District Court held the statutes requiring appellee to pay social security and unemployment insurance taxes unconstitutional as applied. The court noted that the Amish believe it sinful not to provide for their own elderly and needy and therefore are religiously opposed to the national social security system.[3] The court also accepted appellee's contention that the Amish religion not only prohibits the acceptance of social security benefits, but also bars all contributions by Amish to the social security system. The District Court observed that in light of their beliefs, Congress has accommodated self-employed Amish and self-employed members of other religious groups with similar beliefs by providing exemptions from social security taxes. 26 U.S.C. § 1402(g).[4] The court's holding was based on both the exemption statute for the self-employed and the First Amendment; appellee and others "who fall within the carefully circumscribed definition provided in 1402(g) are relieved from paying the employer's share of [social security taxes] as it is an unconstitutional infringement upon the free exercise of their religion."[5]

Direct appeal from the judgment of the District Court was taken pursuant to 28 U.S.C. § 1252.


The exemption provided by § 1402(g) is available only to self-employed individuals and does not apply to employers or employees. Consequently, appellee and his employees are not within the express provisions of § 1402(g). Thus any exemption from payment of the employer's share of social security taxes must come from a constitutionally-required exemption.


The preliminary inquiry in determining the existence of a constitutionally-required exemption is whether the payment of social security taxes and the receipt of benefits interferes with the Free Exercise rights of the Amish. The Amish believe that there is a religiously based obligation to provide for their fellow members the kind of assistance contemplated by the social security system. Although the government does not challenge the sincerity of this belief, the government does contend that payment of social security taxes will not threaten the integrity of the Amish religious belief or observance. It is not within "the judicial function and judicial competence," however, to determine whether appellee or the government has the proper interpretation of the Amish faith; "[c]ourts are not arbiters of scriptural interpretation." Thomas v. Review Bd. of Indiana Employment Sec., 101 S. Ct. 1425, 1431 (1981).[6] We therefore accept appellee's contention that both payment and receipt of social security benefits is forbidden by the Amish faith. Because the payment of the taxes or receipt of benefits violates Amish religious beliefs, compulsory participation in the social security system interferes with their Free Exercise rights.

The conclusion that there is a conflict between the Amish faith and the obligations imposed by the social security system is only the beginning, however, and not the end of the inquiry. Not all burdens on religion are unconstitutional. See, e.g., Prince v. Massachusetts, 321 U.S. 158 (1944); Reynolds v. United States, 98 U.S. 145 (1879). The state may justify a limitation on religious liberty by showing that it is essential to accomplish an overriding governmental interest. Thomas, supra; Wisconsin v. Yoder, 406 U.S. 205 (1972); Gillette v. United States, 401 U.S. 437 (1971); Sherbert v. Verner, 374 U.S. 398 (1963).


Because the social security system is nationwide, the governmental interest is apparent. The social security system in the United States serves the public interest by providing a comprehensive insurance system with a variety of benefits available to all participants, with costs shared by employers and employees.[7] The social security system is by far the largest domestic governmental program in the United States today, distributing approximately $11 billion monthly to 36 million Americans.[8] The design of the system requires support by mandatory contributions from covered employers and employees. This mandatory participation is indispensable to the fiscal vitality of the social security system. "[W]idespread individual voluntary coverage under social security . . . would undermine the soundness of the social security program." S. Resp. No. 404, 89th Cong., 1st Sess., Pt. 111, U.S. Code Cong. & Admin. News (1965), pp. 1943, 2056. Moreover, a comprehensive national social security system providing for voluntary participation would be almost a contradiction in terms and difficult, if not impossible, to administer. Thus, the government's interest in assuring mandatory and continuous participation in and contribution to the social security system is very high.[9]


The remaining inquiry is whether accommodating the Amish belief will unduly interfere with fulfillment of the government interest. In Braunfeld v. Brown, 366 U.S. 599, 605 (1961), this Court noted that "to make accommodation between the religious action and an exercise of state authority is a particularly delicate task . . . because resolution in favor of the State results in the choice to the individual of either abandoning his religious principle or facing . . . prosecution." The difficulty in attempting to accommodate religious beliefs in the area of taxation is that "we are a cosmopolitan nation made up of people of almost every conceivable religious preference." Braunfeld, 366 U.S. at 606. The Court has long recognized that balance must be struck between the values of the comprehensive social system, which rests on a complex of actuarial factors, and the consequences of allowing religiously based exemptions. To maintain an organized society that guarantees religious freedom to a great variety of faith requires that some religious practices yield to the common good. Religious beliefs can be accommodated, see e.g., Thomas, supra; Sherbert, supra, but there is a point at which accommodation would "radically restrict the operating latitude of the legislature." Braunfeld, supra at 606.[10]

Unlike the situation presented in Wisconsin v. Yoder, supra, it would be difficult to accommodate the comprehensive social security system with myriad exceptions flowing from a wide variety of religious beliefs. The obligation to pay the social security tax initially is not fundamentally different from the obligation to pay income taxes; the difference -- in theory at least -- is that the social security tax revenues are segregated for use only in furtherance of the statutory program. There is no principled way, however, for purposes of this case, to distinguish between general taxes and those imposed under the Social Security Act. If, for example, a religious adherent believes war is a sin, and if a certain percentage of the federal budget can be identified as devoted to war-related activities, such individuals would have a similarly valid claim to be exempt from paying that percentage of the income tax. The tax system could not function if denominations were allowed to challenge the tax system because tax payments were spent in a manner that violates their religious belief. (See e.g., Lull v. Commissioner, 602 f. 2d 1166 (CA 4 1979), cert. denied, 444 U.S. 1014 (1980); Autenrieth v. Cullen, 418 F. 2d 586 (CA 9 1969), cert. denied, 397 U.S. 1036 1970). Because the broad public interest in maintaining a sound tax system is of such a high order, religious belief in conflict with the payment of taxes affords no basis for resisting the tax.


Congress has accommodated, to the extent compatible with a comprehensive national program, the practices of those who believe it a violation of their faith to participate in the social security system. In § 1402(g) Congress granted an exemption, on religious grounds, to self-employed Amish and others.[11] Confining the § 1402(g) exemption to the self-employed provided for a narrow category which was readily identifiable. Self-employed persons in a religious community having its own "welfare" system are distinguishable from the generality of wage earners employed by others.

Congress and the courts have been sensitive to the needs flowing from the Free Exercise Clause, but every person cannot be shielded from all the burden incident to exercising every aspect of the right to practice religious beliefs. When followers of a particular sect enter into commercial activity as a matter of choice, the limits they accept on their own conduct as a matter of conscience and faith are not to be superimposed on the statutory schemes which are binding on others in that activity. Granting an exemption from social security taxes to an employer operates to impose the employer's religious faith on the employees. Congress drew a line in § 1402(g), exempting the self-employed Amish but not all persons working for an Amish employer. The tax imposed on employers to support the social security system must be uniformly applicable to all, except as Congress provides explicitly otherwise.[12]

[1] The Social Security Act and its subsequent amendments provide a system of old age and unemployment benefits. 26 U.S.C. § 3101 et seq. These benefits are supported by various taxes, including, relevant to this appeal, 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, 26 U.S.C. § 3101, and in part by employers through an excise tax. 26 U.S.C. § 3111. FUTA is an excise tax imposed only on employers. 26 U.S.C. § 3301. Both taxes are based on the wages paid to employees, and the recordkeeping and transmittal of funds are obligations of the employer. Only FICA is collected from self-employed individuals.

In this case appellee failed to pay the employer's portion of FICA and FUTA taxes and failed to withhold his employee's contributions to FICA. An employer is liable for payment of the employee's share of FICA whether or not he withholds the required amount of the employee's contribution. 26 U.S.C. § 3102(b).

[2] Appellee also requested injunctive relief to prevent the Commissioner of Inter Revenue from attempting to collect the unpaid balance of the assessments. Under the Internal Revenue Code, injunctive relief is to be granted sparingly and only in exceptional circumstances. 26 U.S.C. § 7421(a). The District Court therefore denied injunctive relief, but noted that should the government attempt to collect the remaining payments "further Court relief could be requested." District Court Op., Reprinted in Petition for Certiorari p. 8a.

[3] Appellee indicates that his scriptural basis for this belief was: "But if any provide not . . . for those of his own house, he hath denied the faith, and is worse than an infidel." (I Timothy 5:8)

[4] 26 U.S.C. § 1402(g) provides, in part:

"(1) Exemptions. -- Any individual may file an application . . . for an exemption from the tax imposed by this chapter 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)."

In order to qualify for the exemption, the applicant must waive his right to all Social Security benefits and the Secretary of Health and Human Services must find that the particular religious group makes sufficient provision for its dependent members.

[5] The precise basis of the District Court opinion is not clear. The court recognized that on its face § 1402(g) does not apply to appellee because he is not a self-employed individual. The District Court nonetheless used the language of § 1402(g) to provide an exemption for appellee. The court's decision to grant appellee an exemption, however, appears to be based on its view that the statute was unconstitutional as applied. Consequently, this Court has jurisdiction under 28 U.S.C. § 1252 to hear the appeal. See also United States v. American Friends Service Committee, 419 U.S. 7, 9 n. 4(1974).

[6] This is not an instance in which the asserted claim is "so bizarre, so clearly nonreligious in motivation, as not to be entitled to protection under the Free Exercise Clause." Thomas v. Review Bd. of Indiana Employment Sec., 101 S. Ct. 1425, 1431 (1981). At least one other religious organization has sought an exemption under § 1402. See also Henson v. Com'r of Internal Revenue, 66 U.S.T.C. 835 (1976) (member of Sai Baba denied exemption because although opposed to insurance on religious grounds, the faith did not provide of its dependent members).

[7] The Social Security Act was enacted in 1935 to provide supplementary retirement benefits. Over the following 45 years coverage has broadened and the cost of the system has increased dramatically. See A. Abraham, et al., Federal Social Security (1979). In 1939 the Act was amended to provide insurance benefits for retired workers, auxiliaries of retired workers and survivors of deceased workers. In 1950 coverage was extended to self-employed workers and to select other employees previously excluded. In 1954 and 1956 disability benefits were added and in 1965 Medicare benefits were made available to participants in the System.

[8] National Commission on Social Security, Social Security in America's Future 5 (1981).

[9] The fiscal soundness of the Social Security has been the subject of several studies and of congressional concern, see e.g., Congressional Budget Office, Paying for Social Security: Funding Options for the Near Future (1981).

[10] See e.g., Follett v. Town of McCormick, 321 U.S. 573 (1944) (preacher not entitled to be free from taxes); Murdock v. Pennsylvania, 319 U.S. 105, 112 (1943) (smae).

[11] The District Court read this as extending to the present claims. We need not decide whether the Free Exercise Clause compelled an exemption as provided by § 1402(g); Congress' grant of the exemption was an effort toward accommodation. Nor do we need to decide whether, if Congress had, as the District Court believe, intended § 1402(g) to reach this case, conflicts with the Establishment Clause would arise.

[12] We note that here the statute compels contributions to the system by way of taxes; it does not compel anyone to accept benefits. Indeed, it would be possible for an Amish member, upon qualifying for social security benefits, to receive and pass them along to an Amish fund having parallel objections. It is not for us to speculate whether this would ease or mitigate the perceived sin of participation.

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