Reg. § 31.3127-1 Exemption for employers and their employees if both are members of religious faiths opposed to participation in Social Security Act programs.
(a) Exemption
(1) Employer Except as provided in of this section, an employer is exempt from the taxes imposed by section on wages paid to an employee if—
(i) The employer (or if the employer is a partnership, each partner therein) and its employee are members of a recognized religious sect or division described in section ;
(ii) Both the employer (or if the employer is a partnership, each partner therein) and the employee adhere to the tenets and teachings of that sect; and
(iii) Both the employer and the employee have filed and had approved applications under section for exemption from the taxes imposed by sections and .
(2) Employee If an employer is exempt from the taxes imposed by section under of this section, then each employee described in of this section is exempt from the taxes imposed by section on the wages received with respect to employment with that employer.
(b) Corporation Services performed in the employ of a corporation are not within the exemption described in of this section, except that services performed in the employ of an entity that is treated as a corporation under may qualify for the exemption if the requirements of the exemption are otherwise met. An entity that is treated as a corporation under is not treated as the employer for purposes of applying section and this section. For purposes of applying section and of this section, the owner of an entity that is treated as a corporation under is treated as the employer.
(c) Effective/applicability date This section applies to wages paid on or after November 1, 2011. However, taxpayers may apply this section to wages paid on or after January 1, 2009.
[T.D. 9670, 79 FR 36206, June 26, 2014]