20 CFR 404.305(a) and 404.1075
The general issue in this case is whether the claimant is entitled to OAIB. The specific issue is whether he has waived his rights to such benefits under section 202(v) of the Act.
The Internal Revenue Service (IRS) granted the claimant, who is a member of the Old Order Amish Church, an exemption from the payment of Social Security self-employment taxes under the provisions in section 1402(g) of the IRC. The claimant subsequently applied for OAIB, but the payment of those benefits was denied, under section 202(v) of the Act, because the tax exemption granted to him was still in effect. When SSA denied the claimant's application, he appealed, contending that he had not been informed that the granting of the exemption would preclude the payment of Social Security benefits.
Section 1402(g)(1) of the IRC provides, in part, that --
Section 1402(g)(3)(B) of the IRC provides that the tax exemption on religious grounds shall end after the time the individual ceases to be a member of a properly recognized tax exempt religious sect, or when he ceases to be an adherent of established tenets or teachings of such sect, or at the time the Secretary of Health and Human Services (HHS) finds that the sect of which the individual is a member ceases to meet the requirements of section 1402(g)(1)(C) or section 1402(g)(1)(D).
Section 1402(g)(1)(C) of the IRC provides that the Secretary of HHS determines whether such sect has the established teachings referred to in the first sentence of section 1402(g)(1).
Section 1402(g)(1)(D) of the IRC provides that the Secretary of HHS determines whether it is the practice of the sect for members to make provision for their dependent members which in his judgment is reasonable in view of their general level of living.
The claimant acknowledged signing Form 4029 (Application for Exemption from Self-Employment Tax, Claim for Refund and Waiver of Benefits). The form, which is in total compliance with section 202(v) of the Act and section 1402(g) (formerly 1402(h)) of the IRC, clearly sets forth the requirements for eligibility for the tax exemption and includes the following provisions:
Immediately above the claimant's signature is the declaration, "Under penalties of perjury, I declare that this application, claim, and waiver has been examined by me and to the best of my knowledge and belief it is true and correct."
The evidence shows that the claimant has acknowledged that he freely signed, in the presence of his wife and attorney, without peer pressure, Form 4029 as prepared by the attorney, whom he had retained for income tax purposes, and that the claimant has never taken any formal action to terminate the agreement made with the IRS. There has been no contention that the claimant was incapable of reading and understanding Form 4029 when he signed it; and presumably, he has been provided with an approved copy of that form. The claimant's position, that he was never informed that the granting of the exemption would preclude the payment of Social Security benefits, is contradicted by the express wording of Form 4029 which he signed, under penalty of perjury, as being correct.
While the Act and the IRC are interwoven on the issue of tax exemption and waiver of benefits, the separate laws and regulations do set limits on the actions of SSA and the IRS.
Thus, the IRS had the sole power to grant or terminate individual applications, and SSA was limited to making determinations as to whether specific religious sects originally met or continued to meet requirements for exemption under the IRC. There is no provision for SSA to approve a termination of the waiver by an individual under the Act. However, the IRS does provide a specific means for termination under which the individual simply is required to notify the IRS if he has disassociated himself from the Church, or if he no longer adheres to its established tenets.
Inasmuch as SSA has no authority to terminate the tax exemption and the claimant has admittedly not taken the action permitted by the IRS to terminate his exemption, the Appeals Council concludes that the waiver continues to be in effect. Since only earnings reported after a formal termination of the tax exemption may be used to establish quarters of coverage for entitlement to Social Security benefits, the claimant presently has no quarters of coverage and thus is not entitled to OAIB.
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