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Coverage of Church Employees Under the Social Security (FICA) System

There are three important developments to report concerning the coverage of church employees under the Social Security (FICA) system:

1. A federal appeals court recently rejected the contention of a local church that the current treatment of churches and church employees under the Social Security program amounts to a violation of the constitutional guaranty of religious freedom.

Here are the facts. In 1983, Congress amended the Internal Revenue Code to make church employees subject, for the first time, to mandatory Social Security (FICA) taxation effective January 1, 1984. Congress later partially restored the previous exemption (retroactive to January 1, 1984) for any church that (1) was opposed for religious reasons to the payment of the employer's share of FICA taxes, and (2) irrevocably elected to exempt itself from Social Security taxation by filing a Form 8274 with the IRS no later ...

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