The Act excludes from the term “trade or business”, the services of individuals who have been exempted from the payment of self-employment tax on the grounds of religious belief under section 1402(g) of the IRC.

The Act exempts from Social Security taxation wages of employees who:

have an approved exemption from tax on religious grounds under 1402(g) of the IRC;

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  have waived their right to Social Security benefits and Medicare; and

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  have an employer who either meets the requirement of A. above, is a partnership in which all partners meet the requirements of A. above or is a church or church-controlled organization that has an approved exemption from taxation as described in RS 01901.660.

SSA cannot use earnings (i.e., wages or self-employment income) to determine an individual's eligibility to benefits or benefit amount for years that fall within the effective period; i.e., any earnings posted prior to the approved exemption/waiver and after the approved exemption/waiver. Only earnings posted for and after the effective date of a cessation event can be used to determine eligibility to benefits and benefit amount.