The Clergy Act would create a limited window for ordained clergy, religious order members, and Christian Science practitioners to revoke an existing exemption from Social Security coverage (the exemption ministers can elect under the tax code). If they file the revocation by a specified deadline (the due date of their 2029 tax return, i.e., the second tax year beginning after December 31, 2027, with the possibility to choose the first or second year after that date as the effective year), their Social Security coverage would apply from that year forward, and they would no longer be eligible to re-elect the exemption. If the revocation is filed after the tax return due date for a year, the applicant would owe back taxes for that year as if they had not claimed the exemption. The bill also requires a plan to inform eligible clergy about revocation eligibility within 90 days of enactment. The changes would affect how Social Security benefits (monthly benefits and certain death benefits) are computed once the revocation is effective.
Key Points
- 1Creates a one-time revocation option for clergy previously exempt from Social Security coverage, available by filing an application prescribed by the IRS, with a deadline tied to the 2029 tax-year filing (the second taxable year after December 31, 2027).
- 2The revocation can be made to take effect for the first taxable year after December 31, 2027 or the second such year, and then would apply to all future years; once revoked, the individual may not again seek exemption under 1402(e)(1).
- 3If the revocation is effective for a given year and filed after that year’s tax return due date, the individual must pay back taxes equivalent to the self-employment tax that would have been due for that year (excluding certain exemptions and provisions).
- 4Once effective, the revocation changes Social Security treatment: ongoing Social Security coverage resumes, and benefits (monthly Social Security benefits and lump-sum death benefits) would be calculated based on wages and self-employment income for months starting in or after the revocation year.
- 5A plan must be developed and submitted to inform eligible clergy of their revocation eligibility within 90 days of enactment, in coordination between the IRS and the Social Security Administration.