[Code of Federal Regulations]
[Title 26, Volume 15]
[Revised as of April 1, 2004]
From the U.S. Government Printing Office via GPO Access
[CITE: 26CFR31.3121(r)-1]

[Page 93-96]
 
                       TITLE 26--INTERNAL REVENUE
 
    CHAPTER I--INTERNAL REVENUE SERVICE, DEPARTMENT OF THE TREASURY 
                               (CONTINUED)
 
PART 31_EMPLOYMENT TAXES AND COLLECTION OF INCOME TAX AT SOURCE--Table of Contents
 
  Subpart B_Federal Insurance Contributions Act (Chapter 21, Internal 
                          Revenue Code of 1954)
 
Sec. 31.3121(r)-1  Election of coverage by religious orders.

    (a) In general. A religious order whose members are required to take 
a vow of poverty, or any autonomous subdivision of such an order, may 
elect to have the Federal old-age, survivors, and disability insurance 
system established by title II of the Social Security Act extended to 
services performed by its members in the exercise of duties required by 
such order or subdivision. See section 3121(i)(4) and Sec. 31.3121(i)-4 
for provisions relating to the computation of the amount of remuneration 
of such members. For purposes of this section, a subdivision of a 
religious order is autonomous if it directs and governs its members, if 
it is responsible for its members' care and maintenance, if it is 
responsible for the members' support and maintenance in retirement, and 
if the members live under the authority of a religious superior who is 
elected by them or appointed by higher authority.
    (b) Definition of member--(1) In general. For purposes of section 
3121(r) and this section, a member of a religious order means any 
individual who is subject to a vow of poverty as a member of such order, 
who performs tasks usually required (and to the extent usually required) 
of an active member of such order, and who is not considered retired 
because of old age or total disability.

[[Page 94]]

    (2) Retirement because of old age--(i) In general. For purposes of 
section 3121(r)(2) and this paragraph, an individual is considered 
retired because of old age if (A) in view of all the services performed 
by the individual and the surrounding circumstances it is reasonable to 
consider him to be retired, and (B) his retirement occurred by reason of 
old age. Even though an individual performs some services in the 
exercise of duties required by the religious order, the first test (the 
retirement test) is met where it is reasonable to consider the 
individual to be retired.
    (ii) Factors to be considered. In determining whether it is 
reasonable to consider an individual to be retired, consideration is 
first to be given to all of the following factors:
    (A) Nature of services. Consideration is given to the nature of the 
services performed by the individual in the exercise of duties required 
by his religious order. The more highly skilled and valuable such 
services are, the more likely the individual rendering such services is 
not reasonably considered retired. Also, whether such services are of a 
type performed principally by retired members of the individual's 
religious order may be significant.
    (B) Amount of time. Consideration is also given to the amount of 
time the individual devotes to the performance of services in the 
exercise of duties required by his religious order. This time includes 
all the time spent by him in any activity in connection with services 
that might appropriately be performed in the exercise of duties required 
of active members by the order. Normally, an individual who, solely by 
reason of his advanced age, performs services of less than 45 hours per 
month shall be considered retired. In no event shall an individual who, 
solely by reason of his advanced age, performs services of less than 15 
hours per month not be considered retired.
    (C) Comparison of services rendered before and after retirement. In 
addition, consideration is given to the nature and extent of the 
services rendered by the individual before he ``retired,'' as compared 
with the services performed thereafter. A large reduction in the 
importance or amount of services performed by the individual in the 
exercise of duties required by his religious order tends to show that 
the individual is retired; absence of such reduction tends to show that 
the individual is not retired. Normally, an individual who reduces by at 
least 75 percent the amount of services performed shall be considered 
retired.

Where consideration of the factors described in paragraph (b)(2)(ii) of 
this section does not establish whether an individual is or is not 
reasonably considered retired, all other factors are considered.
    (iii) Examples. The rules of this subparagraph may be illustrated by 
the following examples:

    Example 1. A is a member of a religious order who is subject to a 
vow of poverty. A's religious order is principally engaged in providing 
nursing services, and A has been fully trained in the nursing 
profession. In accordance with the practices of her order, upon 
attaining the age of 65, A is relieved of her nursing duties by reason 
of her age, and is assigned to a mother house where she is required to 
perform only such duties as light housekeeping and ordinary gardening. A 
is reasonably considered retired since the services she is performing 
are simple in nature, are markedly less skilled than those professional 
services which she previously performed, are of a type performed 
principally by retired members of her order, and are performed at a 
location to which members frequently retire.
    Example 2. Assume the same facts as in example 1 except that A is 
not reassigned to a mother house. Instead, she is reassigned to full-
time duties in a hospital not utilizing her nursing skills. Whether A 
has met the retirement test requires consideration of the nature of her 
work. If A's new duties are almost entirely of a make-work nature 
primarily to occupy her body and mind, she is reasonably considered 
retired. However, if they are essential to the operation of the 
hospital, she is not reasonably considered retired.
    Example 3. B is a member of a religious order who is subject to a 
vow of poverty. As such, he provides supportive services to his order, 
such as housekeeping, cooking, and gardening. By reason of having 
attained the age of 62, he reduces the number of hours spent per day in 
these services from 8 hours to 2 hours. B is reasonably considered 
retired in view of the large reduction in the amount of time he devotes 
to his duties.
    Example 4. C is a member of a religious order who is subject to a 
vow of poverty. In his capacity as a member of the order, he performs 
duties as president of a university. Upon attaining the age of 65, C is 
relieved of

[[Page 95]]

his duties as president of the university and instead becomes a member 
of its faculty, teaching two courses whereas full-time members of the 
faculty normally teach four comparable courses. Although C's duties are 
no longer as demanding as those he previously performed, and although 
the amount of his time required for them is less than full time, he is 
nonetheless performing duties requiring a high degree of skill for a 
substantial amount of time. Accordingly, C is not reasonably considered 
retired.
    Example 5. Assume the same facts as in example 4, except that C 
teaches only one course upon being relieved of his position as president 
by reason of age. C is reasonably considered retired.
    Example 6. D is a member of a contemplative order who is subject to 
a vow of poverty. In accordance with the practices of his order, upon 
attaining the age of 70, D reduces by 50 percent the amount of time 
spent performing the normal duties of active members of his order. D is 
not reasonably considered retired.
    Example 7. Assume the same facts as in example 6, except that 
because of his age D no longer participates in the more rigorous 
liturgical services of the order and that the amount of time which he 
spends in all duties which might appropriately be performed by active 
members of his order is reduced by 75 percent. D is reasonably 
considered retired in view of the large reduction in his participation 
in the usual devotional routine of his order.

    (3) Retirement because of total disability. For purposes of section 
3121(r)(2) and this paragraph, an individual is considered retired 
because of total disability (i) if he is unable, by reason of a 
medically determinable physical or mental impairment, to perform the 
tasks usually required of an active member of his order to the extent 
necessary to maintain his status as an active member, and (ii) if such 
impairment is reasonably expected to prevent his resumption of the 
performance of such tasks to such extent. A physical or mental 
impairment is an impairment that results from anatomical, physiological, 
or psychological abnormalities which are demonstrable by medically 
acceptable clinical and laboratory diagnostic techniques. Statements of 
the individual, including his own description of his impairment 
(symptoms), are, alone, insufficient to establish the presence of a 
physical or mental impairment.
    (4) Evidentiary requirements with respect to retirement. There shall 
be attached to the return of taxes paid pursuant to an election under 
section 3121(r) a summary of the facts upon which any determination has 
been made by the religious order or autonomous subdivision that one or 
more of its members retired during the period covered by such return. 
Each summary shall contain the name and social security number of each 
such retired member as well as the date of his retirement. Such order or 
subdivision shall maintain records of the details relating to each such 
``retirement'' sufficient to show whether or not such member or members 
has in fact retired.
    (c) Certificates of election--(1) In general. A religious order or 
an autonomous subdivision of such an order desiring to make an election 
of coverage pursuant to section 3121(r) and this section shall file a 
certificate of election on Form SS-16 in accordance with the 
instructions thereto. However, in the case of an election made before 
August 9, 1973, a document other than Form SS-16 shall constitute a 
certificate of election if it purports to be a binding election of 
coverage and if it is filed with an appropriate official of the Internal 
Revenue Service. Such a document shall be given the effect it would have 
if it were a certificate of election containing the provisions required 
by paragraph (c)(2) of this section. However, it should subsequently be 
supplemented by a Form SS-16.
    (2) Provisions of certificates. Each certificate of election shall 
provide that--
    (i) Such election of coverage by such order or subdivision shall be 
irrevocable,
    (ii) Such election shall apply to all current and future members of 
such order, or in the case of a subdivision thereof to all current and 
future members of such order who belong to such subdivision,
    (iii) All services performed by a member of such order or 
subdivision in the exercise of duties required by such order or 
subdivision shall be deemed to have been performed by such member as an 
employee of such order or subdivision, and
    (iv) The wages of each member, upon which such order or subdivision 
shall pay the taxes imposed on employees and employers by sections 3101 
and

[[Page 96]]

3111, will be determined as provided in section 3121(i)(4).
    (d) Effective date of election--(1) In general. Except as provided 
in paragraph (e) of this section, a certificate of election of coverage 
filed by a religious order or its subdivision pursuant to section 
3121(r) and this section shall be in effect, for purposes of section 
3121(b)(8)(A) and for purposes of section 210(a)(8)(A) of the Social 
Security Act, for the period beginning with whichever of the following 
may be designated by the electing religious order or subdivision:
    (i) The first day of the calendar quarter in which the certificate 
is filed,
    (ii) The first day of the calendar quarter immediately following the 
quarter in which the certificate is filed, or
    (iii) The first day of any calendar quarter preceding the calendar 
quarter in which the certificate is filed, except that such date may not 
be earlier than the first day of the 20th calendar quarter preceding the 
quarter in which such certificate is filed.
    (2) Retroactive elections. Whenever a date is designated as provided 
in paragraph (d)(1)(iii) of this section, the election shall apply to 
services performed before the quarter in which the certificate is filed 
only if the member performing such services was a member at the time 
such services were performed and is living on the first day of the 
quarter in which such certificate is filed. Thus, the election applies 
to an individual who is no longer a member of a religious order on the 
first day of such quarter if he performed services as a member at any 
time on or after the date so designated and is living on the first day 
of the quarter in which such certificate is filed. For purposes of 
computing interest and for purposes of section 6651 (relating to 
additions to tax for failure to file tax return or to pay tax), in any 
case in which such a date is designated the due date for the return and 
payment of the tax, for calendar quarters prior to the quarter in which 
the certificate is filed, resulting from the filing of such certificate 
shall be the last day of the calendar month following the calendar 
quarter in which the certificate is filed. The statutory period for the 
assessment of the tax for such prior calendar quarters shall not expire 
before the expiration of 3 years from such due date.
    (e) Coordination with coverage of lay employees. If at the time the 
certificate of election of coverage is filed by a religious order or 
autonomous subdivision, a certificate of waiver of exemption under 
section 3121(k) (extending coverage to any lay employees) is not in 
effect, the certificate of election shall not become effective unless 
the order or subdivision files a Form SS-15, and a Form SS-15a to 
accompany the certificate on Form SS-15, as provided by section 3121(k) 
and Sec. Sec. 31.3121(k)-1 through 31.3121(k)-3. The preceding sentence 
applies even though an order or subdivision has no lay employees at the 
time it files a certificate of election of coverage. The effective date 
of the certificate of waiver of exemption must be no later than the date 
on which the certificate of election becomes effective, and it must be 
specified on the certificate of waiver of exemption that such 
certificate is irrevocable. The certificate of waiver of exemption 
required under this paragraph shall be filed notwithstanding the 
provisions of section 3121(k)(3) (relating to no renewal of the waiver 
of exemption) which otherwise would prohibit the filing of a waiver of 
exemption if an earlier waiver of exemption had previously been 
terminated. If at the time the certificate of election of coverage is 
filed a certificate of waiver of exemption is in effect with respect to 
the electing religious order or autonomous subdivision, the filing of 
the certificate of election shall constitute an amendment of the 
certificate of waiver of exemption making the latter certificate 
irrevocable.

[T.D. 7280, 38 FR 18370, July 10, 1973]