1. SYLLABUS
At issue is an opinion on whether members of the Starland Hutterian Brethen community
should be treated the same as members of Hutterite communities discussed in POMS SI DEN00501.010.
2. OPINION
OUESTION PRESENTED
You asked us to advise on the living arrangement status, income, and resources of
Supplemental Security Income (SSI) claimants and beneficiaries who are members of
the Starland Hutterian Brethren, Inc. (Starland) in Minnesota. You asked whether the
same guidelines found in the POMS at SI DEN00501.010 would apply to members of the Starland Hutterite colony.
BACKGROUND
Starland is a non-profit religious corporation located in Gibbon, Minnesota, that
holds property and provides housing and support to the members of its church community,
who live a communal life. See Articles of Incorporation Introduction, Art. II, IV,
XI. The corporation has a common or community treasury, and the corporation’s business,
which is primarily agricultural, is conducted for the common benefit of the members
of the corporation. Id. at Art. IV.
According to the Articles of Incorporation:
No compensation or payment shall ever be paid or made to any member, officer,
director, trustee, creator or organizer of this corporation or substantial contributor
to
it, except as a reasonable allowance for actual expenditures for the corporation or
work
therefor, and neither the whole nor any part or portion of the assets or net earnings
of the
corporation, current or accumulated, shall ever be distributed to or divided among
such
persons except as is provided in Section 501(d) of the United States Internal Revenue
Code
of 1954.
Id. at Art. VIII. In addition, “[n]o member of the corporation shall . . . hold any
real or personal property rights individually, nor hold any property rights in the
corporation’s property.” Id. at Art. XI.
Under the bylaws, the corporation “shall provide and be responsible for the maintenance,
instruction, education, food, housing, and clothing of all members . . . .” Bylaws
at Art. IX, § 6. When becoming a member, an individual must give all of their property
to the corporation, and after joining, they must give any property that may become
theirs to the corporation “when it will be necessary or when required by the corporation,”
with no right or interest in the property after it is transferred to the corporation.
Id. at § 7. All members must join in the conduct of the business of the corporation
“without pay, wages, or salary,” and no member shall have property rights in any of
the corporation’s property. Id. at § 1. All members must also renounce the right to
hold private property. Id. at § 3. If a member withdraws from the corporation, that
person has “no claim whatsoever” upon the corporation’s property or funds. Id. at
§ 2.
The Internal Revenue Service (IRS) recognizes Starland as a religious or apostolic
corporation that is exempt from paying federal income tax under Section 501(d) of
the Internal Revenue Code. See Letter from R~, Dist. Dir., IRS, to Starland Hutterian
Brethren, Inc. (Dec. 16, 1988). However, the corporation must file a tax return annually
listing the name and address of each member and the amount of their distributive share
of income for the year. See id. The amount of taxable income for each member is a
pro rata share of the corporation’s income for the year. See id. The IRS treats this
amount as a dividend received by the member. See id. In an unsigned letter to SSA
dated April 2021, a member of Starland stated that he and his wife did not own any
assets, and that the dividends from Starland they reported on their tax forms were
not available to them, as they did not actually receive them. Instead, they received
only in-kind support and maintenance for basic necessities in the form of housing,
food, personal effects, and clothing. Another member stated in an interview with the
servicing field office that Starland did not provide an allowance, but when members
had needs, they used the credit card for the community to pay for them.
DISCUSSION
Like the Hutterite colonies in the Denver Region, Starland is a religious colony where
members live a communal life and engage in agricultural activities. See Articles of
Incorporation Art. IV, XI; Bylaws at Art. IX, § 1. It is nonprofit and tax-exempt
under Section 501(d). See id. at Art. IV, VII, XII; Letter from R~, supra.
In regards to living arrangements, the Denver POMS instructs that the federal living
arrangement (FLA) for adults living in a Hutterite colony is always “A,” and that
of a child living with parents in the colony is “C.” We believe that the same FLA
coding would apply with respect to Starland members, as Starland is a Hutterite colony.
In regards to in-kind support and maintenance (ISM), the Denver POMS states that all
food, clothing, and shelter are owned and provided by the Hutterite colony and represent
ISM to individual colony members, subject to the presumed maximum value (PMV). See
POMS SI DEN00501.010.C. We note that, beginning March 9, 2005, SSA does not count the receipt of clothing
as ISM. See POMS SI 00835.001.A (Note). Here, Starland’s bylaws state that the corporation is required to provide
full support and maintenance to its members, including food and shelter. See Bylaws
at Article IX, § 6. And as noted above, a member of Starland indicated that he and
his wife received in-kind support and maintenance from Starland.
The PMV rule presumes that the value of the ISM is one third the benefit rate plus
$20. POMS SI 00835.001.A.2, SI 00835.300. However, if the individual rebuts the presumed value of the ISM, the POMS instructs
to value the ISM at the current market value or the actual value, whichever is less.
POMS SI 00835.001.A.2, SI 00835.320.A, SI DEN00501.010.C.
As noted in the Denver POMS, the value of the one-third reduction (VTR) cannot apply
because the food and shelter are provided by the corporation and not by a household
member. See POMS SI DEN00501.010.B; see also POMS SI 00835.001.A.1, SI 00835.200. Also, the “Church Amendment” ISM exclusion in POMS SI 00835.710 would not apply because the members do not appear to be living in a residential care
institution. POMS SI DEN00501.010.C.
In regards to other income considerations, for federal income tax purposes, a member’s
pro rata share of the corporation’s income must be included in the member’s gross
income “whether distributed or not” and will be treated “as a dividend received.”
26 U.S.C. § 501(d). However, SSA only considers those dividends to be income if they
are actually received. See 20 C.F.R. § 416.1102 (“Income is anything you receive in
cash or in kind . . . .”) (emphasis added); POMS SI DEN00501.010.D (for Hutterite colonies, “a distributive share may be reportable to the Internal
Revenue Service (IRS), but do not count this income unless actually received by the
colony member”). Here, as discussed above, Starland must file a tax return annually
showing the amount of each member’s pro rata distributive share of the corporation’s
income for the year, which is treated as a dividend received by the member. See Letter
from R~, supra. However, the evidence includes an unsigned letter from a member of
Starland asserting that he and his wife did not actually receive the dividends they
reported on their tax forms. According to Starland’s Articles of Incorporation, the
net earnings of the corporation shall not be distributed to or divided among its members
“except as is provided in Section 501(d).” Articles of Incorporation Art. VIII. However,
it is unclear from looking at Section 501(d) whether Starland actually distributes
its net earnings to its members. And the bylaws are silent on the issue. We recommend
that you verify whether or not claimants actually receive any distributions of funds
The Denver POMS provides that Hutterite members can receive cash payments from the
colony to meet special expenses, and that such payments should be counted as unearned
income unless they can be excluded under some other provision, such as the infrequent
or irregular income exclusion found in POMS SI 00810.410. See POMS SI DEN00501.010.D. Here, although payments are not generally made to members of Starland, they can
be paid “a reasonable allowance for actual expenditures for the corporation or work
therefor.” Articles of Incorporation at Article VIII. In addition, according to the
servicing field office, another member of Starland indicated that, while Starland
did not provide an allowance, members could use “the credit card for the community”
to pay for their needs. Thus, it seems that there may be circumstances where a member
may receive funds from the corporation. Therefore, each case will need to be examined
on its own merits to determine whether any funds were actually distributed to the
member and whether any income exclusions may apply.
Additionally, it is possible for a member to have income (earned or unearned) from
another source outside the colony. Even though such income would be turned over to
the colony under the membership rules, it would count as income to the individual
member in the month of receipt. See POMS SI DEN00501.010.D.
In regards to resources, pursuant to POMS SI DEN00501.010.E, the assets of a Hutterite colony are not resources to individual members filing
for or receiving SSI. However, if an individual shares ownership of a resource and
alleges that the resource is a colony asset, the agency will exclude the shared colony
property as a resource for SSI purposes if the individual is a member of a colony
for which the agency has determined that colony property is not available to individual
members of the colony. POMS SI DEN00501.010.E.2. Here, Starland’s Articles of Incorporation and bylaws make it clear that members
have no right or interest in any of the corporation’s property. See Articles of Incorporation
Art. XI; Bylaws at Art. IX, §§ 1, 7. Accordingly, we conclude that colony property
is not available to individual members of the colony and therefore is not a resource
for SSI purposes.
In addition, the Denver POMS advises that if a member of a Hutterite colony retains
sole or shared ownership of other resources, that interest remains a resource to that
individual, unless it meets a resource exclusion found in POMS SI 01130.000. POMS SI DEN00501.010.E.1, 2. We note that members of Starland are prohibited from holding any real or
personal property rights privately. See Articles of Incorporation Art. XI; Bylaws
at Art. IX, § 3. The POMS further instructs not to apply a period of ineligibility
when a colony member transfers assets to the colony, since these transfers are for
religious purposes and not to obtain SSI. See POMS SI 01150.125, SI DEN00501.010.E.3.
CONCLUSION
In sum, we conclude that the same guidelines found in the POMS at SI DEN00501.010 would apply to members of the Starland Hutterite colony. In particular, in order
to determine whether dividends from Starland can be excluded from income counting
for SSI purposes, we recommend that SSA verify whether any funds are actually paid
to claimants. We also conclude that the colony property of Starland is not available
to individual members and therefore is not a resource for SSI purposes.