HR227-119

What This Bill Does

The Clergy Act gives certain clergy and religious practitioners a one-time path back into Social Security self-employment coverage. Ministers, members of religious orders, and Christian Science practitioners who previously filed an exemption under Internal Revenue Code section 1402(e)(1) could revoke that exemption notwithstanding the general rule that it is irrevocable. The application must be filed by the due date, including extensions, for the second taxable year beginning after December 31, 2028. The revocation is effective for the first or second taxable year after December 31, 2028, as specified in the application, and for all later taxable years. A person who revokes cannot later file a new exemption, and if the application is filed after the due date for a year in which it is effective, the person must pay the full self-employment tax that would have applied for that year. The IRS Commissioner, in consultation with the Social Security Commissioner, must send Congress a plan within 90 days for informing eligible clergy and practitioners.

Who Benefits and How

Ministers who opted out of Social Security benefit by receiving a limited opportunity to regain coverage based on future self-employment income. Members of religious orders and Christian Science practitioners benefit from the same revocation option if they previously elected the exemption. Clergy approaching retirement or disability risk may gain access to Social Security title II monthly benefits or lump-sum death payment treatment tied to covered service. The Social Security Trust Funds benefit from additional self-employment tax payments by clergy who revoke exemptions. Religious employers and advisers benefit from clearer statutory timing for counseling eligible clergy.

Who Bears the Burden and How

Clergy who revoke exemptions must pay self-employment taxes for covered service and may owe full SECA taxes for an effective year if they file late. The Internal Revenue Service must process revocation applications, enforce the no-new-exemption rule, and prepare an outreach plan. The Social Security Administration must consult on outreach and apply coverage to later benefit calculations. Clergy tax preparers must advise clients about deadlines, effective years, and tax costs. House Ways and Means and Senate Finance Committees must review the IRS and Social Security outreach plan.

Key Provisions

• Allows eligible ministers, religious order members, and Christian Science practitioners to revoke a prior Social Security self-employment exemption.
• Requires revocation applications by the due date for the second taxable year beginning after December 31, 2028.
• Provides that revocation applies to the selected effective year and all succeeding taxable years.
• Prohibits a person who revokes from filing a new exemption later.
• Requires payment of full self-employment taxes when a late application is effective for that taxable year.
• Applies coverage changes to service after December 31, 2028, and Social Security title II benefits.
• Directs IRS and Social Security officials to submit an outreach plan to tax-writing committees within 90 days.