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.