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Published:   |   Last Updated: February 8, 2024

The IRS’s Position on the Application of the Religious Freedom Restoration Act to the Social Security Requirement Under Internal Revenue Code § 24(h)(7) Has the Effect of Denying Child Tax Credit Benefits to the Amish and Certain Other Religious Groups

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As part of the Tax Cuts and Jobs Act (TCJA) passed in December 2017, the Child Tax Credit (CTC) (Internal Revenue Code (IRC) § 24) was amended to require a Social Security number (SSN) for all qualifying children for whom the credit is being claimed. The stated purpose for the TCJA amendment was to prevent taxpayers who are not eligible to obtain a work-eligible SSN from improperly or fraudulently claiming the CTC or the American Opportunity Tax Credit (AOTC). This requirement raised concerns for some taxpayers—most notably the Amish—some of whom will refrain from obtaining SSNs for their children altogether or for themselves until later in life, due to their deeply held religious beliefs. Prior to this amendment, IRC § 24 only required that a taxpayer identification number (TIN) be provided, and the IRS developed a procedure that allowed Amish taxpayers to claim the dependent exemption under IRC § 151 and the CTC without placing an identifying number on the dependent line of the return. These procedures, described below, have been in place for over 30 years.

After I raised this issue back in the summer of 2018, and after the IRS reversed course several times, IRS Chief Counsel issued program manager technical advice (PMTA) on March 29, 2019, concluding “… the [IRS] need not provide administrative relief for these taxpayers.”  The IRS revised its guidance on April 15, 2019, to reflect the Chief Counsel’s advice and is disallowing the CTC where qualifying children do not have SSNs on the basis of religious beliefs. Under the TCJA, the maximum CTC for 2018 was $2,000 per child. However, without an SSN, the taxpayer can only receive a partial $500 credit allowed for a dependent—a significant reduction of 75 percent.

In my recent Fiscal Year 2020 Objectives Report to Congress, I discuss how I consider the conclusion in this advice to be incorrect because the IRS is disallowing the Child Tax Credit to taxpayers who do not provide an SSN for their dependent(s) due to their deeply held religious beliefs, but is allowing the credit to taxpayers who do not have an SSN for their dependent because the child was born and died within the same or consecutive year. Providing an exception for an unprotected class (albeit a very sympathetic one) while denying an exception for a protected class (i.e. the Amish) is a violation of the holding in Sherbert v. Verner as incorporated into the Religious Freedom Restoration Act (RFRA).

Tension between an individual’s free exercise of religion and a statutory obligation set out in the Tax Code is not a new issue, and is something the Amish community in particular has addressed beginning in about the 1950’s. Amish beliefs prohibit them from accepting government benefits because they believe that God and the community should care for those in need. One consequence of observing these and other core beliefs is that the Amish refrain from accepting Social Security and Medicare benefits, and in some cases from even obtaining a Social Security number, at least until later in life. To accommodate this deeply held belief, Congress passed IRC §§ 1402(g) and 3127, which relieve qualifying religious individuals from complying with the old-age, survivors, and disability insurance obligation.

The Amish community once again finds its free exercise of religion at odds with a statutory requirement and IRS Chief Counsel’s advice on how it should be implemented. As the discussion below will illustrate, I think Chief Counsel’s conclusion is incorrect.

There are four landmark Supreme Court cases that established the framework for analyzing free exercise of religion cases: Sherbert v. VernerWisconsin v. YoderUnited States v. Lee, and Employment Division, Department of Human Resources of Oregon v. Smith. A brief discussion of these cases follows. For a more in-depth discussion of these cases, read my most recent Objectives Report to Congress.

In Sherbert v. Verner, 374 U.S. 398 (1963), after being fired for being unable to work on Saturdays due to her religious obligations, appellant applied for unemployment compensation, which was denied because the state’s law provided that a claimant is ineligible for unemployment if he or she has failed, without good cause, to accept other available work offered. Appellant refused other offers that required her to work on Saturdays, the day she observed as the holy Sabbath.

The Court held that denial of Ms. Sherbert’s unemployment claim represented a substantial burden upon her free exercise of religion. Justice Brennan, who wrote the majority opinion, stated, “… to condition the availability of benefits upon this appellant’s willingness to violate a cardinal principle of her religious faith effectively penalizes the free exercise of her constitutional liberties.”  The Court next considered “whether some compelling state interest enforced in the eligibility of the South Carolina [unemployment insurance] statute justifies the substantial infringement of appellant’s First Amendment right.”  The Court concluded there was none and noted:

Significantly, South Carolina expressly saves the Sunday worshipper from having to make the kind of choice which we here hold infringes the Sabbatarian’s religious liberty. When, in times of “national emergency,” the textile plants are authorized by the State Commissioner of Labor to operate on Sunday, “no employee shall be required to work on Sunday . . . who is conscientiously opposed to Sunday work, and if any employee should refuse to work on Sunday on account of conscientious . . . objections, he or she shall not jeopardize his or her seniority by such refusal or be discriminated against in any other manner.” S.C. Code, § 64 4. No question of the disqualification of a Sunday worshipper for benefits is likely to arise, since we cannot suppose that an employer will discharge him in violation of this statute. The unconstitutionality of the disqualification of the Sabbatarian is thus compounded by the religious discrimination which South Carolina’s general statutory scheme necessarily effects.

Further, this opinion established what is known as the Sherbert Test, which requires the demonstration of a compelling interest and a narrow tailoring of a law that substantially burdens an individual’s free exercise of religion.

In Wisconsin v. Yoder, 406 U.S. 205 (1972), the U.S. Supreme Court held that Wisconsin’s compulsory school attendance law, requiring children to attend school until age 16 (Amish children stop attending school after 8th grade) was unconstitutional when applied to the Amish, because it imposed a substantial burden on their free exercise of religion and was unnecessary to serve a compelling governmental interest.

After Sherbert and Yoder, in United States v. Lee, 455 U.S. 252 (1982) and Employment Division, Department of Human Resources of Oregon v. Smith, 494 U.S. 872 (1990), the Court began to erode the compelling governmental interest standard of scrutiny. Specifically, in Smith, the Court held that the “right of free exercise does not relieve [an] individual of [the] obligation to comply with [a] valid or neutral law of general applicability on [the] ground that [the] law proscribes, or requires, conduct that is contrary to his religious practice.”

Congress responded to the Smith ruling by passing the Religious Freedom Restoration Act in 1993 on a bipartisan vote. The stated purpose of RFRA was:

1. To restore the compelling interest test as set forth in Sherbert and Yoder and to guarantee its application in all cases where free exercise of religion is substantially burdened; and
2. To provide a claim or defense to persons whose religious exercise is substantially burdened by government (42 U.S.C. 2000bb-(1),(2)).

One of the most recent and significant cases where the standards set out in RFRA were applied to a federal law and a regulation was Burwell v. Hobby Lobby Stores, Inc., 573 U.S. 682 (2014). In Hobby Lobby, the Court weighed a free exercise claim against the Patient Protection and Affordable Care Act’s (ACA) requirement that businesses’ health insurance include coverage for contraception. Three closely held corporations and their owners asserted that such a requirement violated their religious beliefs. The least-restrictive-means standard is exceptionally demanding, said the Court, and it was not satisfied that the government met that standard in this case. The relevant inquiry is whether an agency is able to show that it lacks other means of achieving its desired goal without imposing a substantial burden on the exercise of religion. The Court noted that the Secretary of Health and Human Services had previously adopted other means by which the regulation could be complied with while not substantially burdening a person’s free exercise of religion. Additionally, the Court determined that failing to provide this alternative means of compliance would force the companies’ owners to either violate their deeply held religious beliefs or honor those beliefs and ultimately pay a financial penalty of millions of dollars, thereby substantially burdening their free exercise of religion.

I think it is clear that the Supreme Court’s Hobby Lobby decision demonstrates its expectation that agencies must conduct an RFRA analysis when developing administrative policies and procedures. For this reason, the IRS must consider whether its interpretation of IRC § 24(h)(7)—or any statute—would run afoul of RFRA. When conducting such an analysis to the issue at hand, I think the Chief Counsel’s advice rightly concludes that the IRS has a compelling governmental interest to ensure uniform and orderly tax administration and to prevent improper CTC claims.

However, the conclusion in the Chief Counsel’s advice regarding the SSN requirement in IRC § 24 (h)(7) that “… the least restrictive, and the only, means to further those compelling interests is to require a qualifying child’s eligible SSN” is inconsistent with the holding in Sherbert which Congress reinstated in RFRA. Essentially, the IRS’s position seems to be that because IRC § 24 is a generally applicable and neutral statute that on its face categorically requires an SSN to fulfill a compelling government interest, it need not conduct any further analysis. Indeed, under First Amendment Free Exercise jurisprudence after Smith, that may be the case.

But Congress enacted RFRA to statutorily provide greater protection to the free exercise of religion than the courts grant.

However, I think the government’s argument falls flat when trying to meet RFRA, which requires the application of the Sherbert analysis to determine the least restrictive means to achieve its compelling purpose. Since about the mid-1980s there has been, and still is, a procedure whereby the IRS processes returns from religious and conscientious objectors claiming dependent exemptions without SSNs. (These procedures still apply to late-filed returns for which the dependent exemption under IRC § 151 is still available.)  This procedure requires the taxpayer to state on his or her return that he or she is “4029 Exempt,” because that taxpayer filed and received both Social Security Administration and IRS approval of the Form 4029Application for Exemption from Social Security and Medicare Taxes and Waiver of Benefits. Up until the issuance of the new IRS guidance, it corresponded with the taxpayer and required him or her to provide detailed information and documentation demonstrating the existence, age, relationship, and residence of the child before the IRS processed the return. This procedure, which amounts to a pre-processing audit, more than addresses the risk of fraud, which, as noted earlier, is the stated purpose for the SSN requirement when claiming the Child Tax Credit.

But that is not the end of our analysis. Here, as in Sherbert, the government is applying the SSN requirement disparately between groups of taxpayers. Specifically, despite the statutory requirement that qualifying children have SSNs for taxpayers to claim and receive the CTC and Earned Income Credit (EITC), the IRS has put in place procedures that allow parents of children who were born and died in the same or consecutive tax years to claim these credits even if they do not have an SSN for the child. Internal Revenue Manual (IRM) (3), updated April 15, 2019, after the issuance of the Chief Counsel memo, states:

Allow the Child Tax Credit when the child’s SSN is missing, and the child was born and died in the same or consecutive tax period if the taxpayers provide documentary support in the form of a copy of the birth certificate, death certificate, or hospital record …

Moreover, the IRS has provided guidance regarding these procedures to taxpayers in general, in the form of an FAQ on its website.

Thus, despite the IRS’s position that the statute on its face requires it to deny CTC claims where a child does not have an SSN for religious reasons, the IRS has found a way—and established a procedure—to permit CTC claims where a child does not have an SSN because the child was born and died in the same or consecutive years. Of course, I find this group extremely sympathetic, but they are not a protected class under the Constitution, and they are not entitled to greater legal protection than that of a legally protected class such as the Amish. Providing an unprotected class with an exception to the SSN requirement under IRC § 24(h)(7) while denying the same exception to a protected class does not comport with the holding in Sherbert as incorporated into RFRA, which requires the law to be neutral and generally applicable: if an exemption is offered to one, it must be offered to everyone.

Furthermore, providing this exception for the parents of children who were born and died in the same or consecutive years illustrates the fallacy of the Chief Counsel’s claim that:

In light of the unambiguous language of section 24(h)(7), the least restrictive, and indeed the only, means to further those compelling interests is to require a qualifying child’s eligible SSN for CTC. The Service has no ‘viable alternative’ to implement this clear congressional mandate to require an eligible SSN for a qualifying child.

Some have suggested that the IRS’s exercise of prosecutorial discretion would enable the IRS to permit parents of children born and deceased in the same or consecutive years to claim the CTC without an SSN. That may well be true, but the government cannot then argue that its compelling government purpose—to combat improper or fraudulent claims of CTC—is a justification for substantially burdening the religious beliefs of Amish taxpayers when it is clearly applying a less restrictive means to another (non-religious) group of taxpayers.

Others have lamented that Congress has created this mess by not writing an exception into the law for the Amish and others with religious objections to an SSN. Again, that may be true, but RFRA is Congress’ acknowledgement that despite its best intentions, it may write neutral and generally applicable laws that still substantially burden the free exercise of religion. Through RFRA, Congress has attempted to provide those persons with an avenue to challenge that burden. Lamenting about the current state of affairs does not excuse one from conducting a rigorous and complete RFRA analysis.
For these reasons, I think that the recent Chief Counsel advice on the CTC issue impermissibly and substantially burdens the free exercise of religion under RFRA. The existence of effective and less-burdensome anti-fraud procedures means the IRS can continue to exercise prosecutorial discretion to grant the CTC and EITC to parents whose children were born and died in the same or consecutive years and apply the exemption afforded to this group of taxpayers to the Amish and similar taxpayers as well.


The views expressed in this blog are solely those of the National Taxpayer Advocate. The National Taxpayer Advocate presents an independent taxpayer perspective that does not necessarily reflect the position of the IRS, the Treasury Department, or the Office of Management and Budget.

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