Rev. Rul. 57-139

Numerous inquiries have been received by the Internal Revenue Service whether, in the absence of the filing of a waiver certificate on Form 2031 (Waiver Certificate for Use by Ministers, Certain Members of Religious Orders, and Christian Science Practitioners Electing Coverage Under Title II of the Social Security Act) prior to April 17, 1956, a duly ordained, commissioned, or licensed minister may obtain self-employment coverage for the calendar year 1955 if he timely filed his Federal income tax return, including Schedule C, for such year and paid the self-employment tax determined to be due under the Self-employment Contributions Act of 1954 (chapter 2, subtitle A, Internal Revenue Code of 1954). Similar inquiries have been received whether a minister may obtain self-employment coverage for 1955 if he timely filed his income tax return, including Schedule C, for such year and paid his self-employment tax, but had on file a waiver certificate designating his election of self-employment coverage to be effective for 1956 or a subsequent year.

Section 1402 of the Self-Employment Contributions Act of 1954 provides, in part, as follows:

(c) TRADE OR BUSINESS.-The term `trade or business', when used with reference to self-employment income or net earnings from self-employment, shall have the same meaning as when used in section 162 (relating to trade or business expenses), except that such term shall not include-

*

(4) the performance of service by a duly ordained, commissioned, or licensed minister of a church in the exercise of his ministry * * *;

* The provisions of paragraph (4) shall not apply to service * * * performed by an individual during the period for which a certificate filed by such individual undersubsection (e) is in effect. * * *

Section 1402(e) of the above Act provides, in part, as follows:

(1) WAIVER CERTIFICATE.-Any individual who is (A) a duly ordained, commissioned, or licensed minister of a church * * * may file a certificate (in such form and manner, and with such official, as may be prescribed by regulations made under this chapter) certifying that he elects to have the insurance system established by title II of the Social Security Act extended to service described in subsection (c)(4) * * *.

(2) TIME FOR FILING CERTIFICATE.-Any individual who desires to file a certificate pursuant to paragraph (1) must file such certificate on or before the due date of the return (including any extension thereof) for his second taxable year ending after 1954 for which he has net earnings from self-employment (computed, in the case of an individual referred to in paragraph (1)(A), without regard to subsection (c)(4), * * * of $400 or more, any any part of which was derived from the performance of service described in subsection (c)(4), * * *.

(3) EFFECTIVE DATE OF CERTIFICATE.-A certificate filed pursuant to this subsection shall be effective for the first taxable year with respect to which it is filed (but in no case shall the certificate be effective for a taxable year with respect to which the period for filing a return has expired, or for a taxable year ending prior to 1955) and all succeeding taxable years. An election made pursuant to this subsection shall be irrevocable.

Section 1.1402(e)-1 of the regulations issued under the Self-Employment Contributions Act of 1954 provides that the election shall be made by filing a waiver certificate on Form 2031. The regulations further provide that if a minister submits to a District Director of Internal Revenue a dated and signed statement indicating he is desirous of having the social security system extended to his ministerial services, the statement will be treated as a waiver certificate (if filed within the prescribed time), provided that without unnecessary delay the statement is supplemented by a properly executed Form 2031. The regulations point out, however, that the filing of an income tax return showing an amount representing self-employment income or self-employment tax shall not be construed to constitute an election of self-employment coverage. The regulations referred to herein were published in final form subsequent to the normal due date for filing Federal income tax returns for the calendar year 1955.

As a result of a general misunderstanding or lack of information as to the statutory requirements concerning the election for self-employment coverage for the calendar year 1955, many ministers failed to file Form 2031 prior to April 17, 1956. However, the action taken by the ministers in filing timely returns, paying the tax, and promptly filing Form 2031 upon being advised of the requirements of the law and regulations is clearly indicative of a desire for self-employment coverage.

In view of the foregoing, the Internal Revenue Service has adopted the position applicable only to 1955 that the action of ministers in filing returns and paying the self-employment tax for the calendar year 1955 will be considered to have met the requirements for self-employment coverage for 1955, provided that Form 2031 is filed without unnecessary delay. Accordingly, in such instances Form 2031 will be considered effective beginning with the calendar year 1955, notwithstanding its actual filing subsequent to April 17, 1956.

The above position is also applicable in any case where a minister timely filed his return and paid the self-employment tax for 1955, even though he had previously filed a waiver certificate designating his election of coverage to be effective for the calendar year 1-956 or a subsequent year, provided that a new waiver certificate designating 1955 as the correct taxable year is filed without unnecessary delay.