Amish at the ABA Tax Section Meeting

On Friday, I was at the ABA Tax Section meeting in San Francisco. Patrick Thomas had invited me to speak on a panel entitled “The IRS Violated My Client’s Religious Liberties: When is This Unlawful and What Can We Do About It?” And, although the panel focused specifically on the Amish, its subject matter is relevant to Mormons’ interest in religious freedom, in immigrant rights, and in what it means to live as a religious individual in a secular society.

Some background before I get into the specifics of our panel. First, it turns out that talking about “the Amish” as if it described a single, unified group is misleading. There are, I’ve been told, at least 40 different Amish groups, each of which differs at least a little in its beliefs and practices. Generally speaking, though, the Amish don’t believe in insurance (government-provided or otherwise). It interferes with the familial and community support they believe the Bible demands of them, and which they value, and it demonstrates a lack of trust in God.

As a result, the Amish have largely been exempted from paying Social Security taxes. That exemption also prevents them from collecting Social Security when they would otherwise qualify, of course. (To claim and memorialize that exemption, they have to sign a Form 4029 which, through a complicated procedure, is also signed by their bishop and has to be processed both by the IRS and the Social Security Administration. Apparently, they generally sign the Form 4029 when they’re baptized, which happens in their late teens or early 20s.)

Along with their opposition to Social Security, at least some Amish object to having a social security number. And that creates a significant problem: under 2017’s Tax Cuts and Jobs Act, until 2025, if you want to claim a child tax credit, the claimed child must have a social security number.

That wasn’t always the case: prior to 2018, a claimed child had to have a taxpayer identification number. Generally, a TIN is a social security number, but, in legislative history, Congress blessed the IRS’s practice of issuing a non-social security number TIN for Amish children. The IRS takes the position that under the TCJA, though, its hands are tied: if a child doesn’t have a social security number, a parent can’t claim the child tax credit for that child. (The IRS does allow the parent to claim a dependent credit, but the dependent credit is $500, while the child tax credit is up to $2,000. So there’s a real difference.)

And I think the IRS is right: section 24 explicitly requires a social security number; there’s no ambiguity the IRS can exploit administratively.

So was Congress out to get the Amish? No. In fact, there’s almost no way they considered the Amish. Rather, this was an unintended consequence of Republicans’ anti-immigrant sentiment. See, this provision was introduced originally by former Rep. Luke Messer. He learned that the IRS sometimes issued TINs to undocumented immigrants, which allowed them to take the child tax credit. To stop that, he authored legislation that would require a social security number to claim the child tax credit. That legislation ended up in the TCJA. Messer boasted in November that “[t]he Trump tax plan also includes a provision I authored to stop $4 billion to $7 billion in refundable child tax credits paid out to illegal immigrants each year.”[fn1]

The Amish got caught in the crossfire of the GOP’s war on immigrants.

But, you might be asking yourself, doesn’t the Free Exercise Clause mean the government has to accommodate the Amish? Or, if not, doesn’t at least RFRA mean there has to be accommodation?

No. Even if this represents a substantial burden on their religious practice (and it may well represent such a burden), the government isn’t required to accommodate where it can show that the law isn’t targeted at religion and that it meets a compelling government interest. And the courts have held that raising revenue is always a compelling government interest, one that trumps religious practice.

So what can the Amish do? They can pay their taxes, then file for a refund in the amount of the child tax credit they say they’re owed. Then, when the IRS doesn’t give them a refund, they can. (Or they can sue in the Tax Court without first paying their tax.) They’ll ultimately lose, but that will preserve their refund for when and if Congress changes the requirements for the child tax credit. And they can lobby (and, I understand, are lobbying) for such a change to happen.


[fn1] Note that the $4 billion to $7 billion number seems to misunderstand a TIGTA report’s conclusion.

Comments

  1. Heptaparaparshinokh says:

    The Amish are aware that Social Security isn’t actually insurance, right? It’s a direct transfer from working people to those considered unable to work because of age or disability. FDR sold it as “insurance” because he felt that a straight fiscal transfer would be unpopular, which does not say much good about the cognitive abilities of American voters.

    Considering the well-documented willingness of the Amish to violate local, state, and federal laws in a host of areas, perhaps it’d be wise to view them decidedly less charitably. (E.g., a handful of Amish egg farms discharge more fecal matter into the Chesapeake Bay watershed, in defiance of Pennsylvania and federal law, than the entirety of the poultry industry on the Eastern Shore of Maryland. That’s no small amount of poop.)

  2. I’m almost entirely sure that, like the vast majority of Americans, the Amish don’t understand that social security is a direct transfer rather than insurance. I’m also pretty confident that wouldn’t matter. I understand that they also eschew other government transfers, including refundable credits. So, for example, they’ll take the EITC to the extent it reduces their tax liability, but they won’t take any amount in excess. (In fact, I learned that the IRS had to figure out a procedure to accept returned checks.)

    As for where they’re good citizens or not: questions of burden on religious practice and accommodation strike me as infinitely more interesting when the religion being burdened is unpopular.

  3. nobody, really says:

    Please to differentiate “legal immigration” and the other kind. We get it, Republicans evil, Orange Man bad, but you might find there are plenty of those evil conservatives who are hugely fans of people entering the US through legal means. In fact, we even likes getting those stable geniuses here.

    Unless, of course, you are taking the Pauline Kael position of “I don’t even *know* anyone who voted for Nixon!”

  4. Thank you, Sam. I’ve generally followed other legal matters concerning the Amish (I have Mennonites in my background). Your explanation here is clear, and disturbing in the ease with which lawmakers are happy to discount the harm of unintended consequences in order to cause deliberately harmful consequences in another direction. But mostly, I appreciate the clarity of your explanation.

  5. Thanks, Sam.
    Also, thumbs up to “questions of burden on religious practice and accommodation strike me as infinitely more interesting when the religion being burdened is unpopular.”

  6. Thanks, Ardis and Chris!

  7. Although some places in the US have more visible Amish communities than LDS, this issue shows that political power (and total membership) tilts heavily in favor of the LDS. There is no way that Senators Lee, Romney, etc. or the numerous LDS congressmen would let something like this happen to many of their constituents. Even if there was just a single congressional district with a 20% Amish population, there likely would have been some carve out made to the tax law.
    Of course just as much blame could be placed upon those in the IRS who let illegal immigrants have TINs.

  8. Just one more “unintended” consequence of the piece of crap tax bill Ryan rushed through Congress. Taxes are complicated and this new tax law made it ever more so (according to my
    “V.P. In charge of international taxes” for a private corporation husband.

    Would you agree Sam?

  9. Absolutely, Maddy. Honestly, there are some decent ideas in the TCJA, but many of them are buried in half-baked and poorly-considered changes that, had the bill gone through a normal political process, would likely (though, I suppose, not inevitably) have been fixed.

  10. So Congress adopted this amendment to the IRS Code without asking the IRS about its impacts. While some politically conservative folks criticize the delegation of legislative authority to executive agencies, the Congress is patently not ready to educate itself sufficiently to take over rulemaking from the departments.

  11. Not sure I follow you on RFRA. “Least restrictive means” was where the government lost in Hobby Lobby, even after the Court assumed that the gov’t interest was compelling. Granted that the “compelling interest” test is always satisfied by the government’s interest in raising revenue, is there some reason the “least restrictive means” test is also satisfied here? I have a hard time believing that “no child tax credit for children without SSNs” is the least restrictive means of furthering the government’s interest in raising revenue.

  12. Mike, good question. There are cases from a few years ago looking at similar SSN requirements that find out to be the least restrictive requirement, even in the face of what the Court accepts as a sincere belief that SSNs are the Mark of the Beast. The basic idea is that other options would increase the administrative complexity and increase the risk of fraud.

    In those earlier cases, the courts acknowledged that the IRS granted an accommodation to the Amish. But they determined that a narrow exception like that didn’t warrant opening the exemption further. So I’m skeptical that, even if they choose to litigate, Amish taxpayers would win in court.

  13. Interesting. Thanks, Sam.

  14. Heptaparaparshinokh says:

    coltakashi: when you look at the percentage of the US population that would consider the Reign of the Judges in the Old Testament to be a model of good government, you’ll understand why there’s such an alarming hostility toward the administrative state on the part of so many conservatives.

  15. Maddy,

    Much of the complexity in the tax code is the result of attempting to thwart dishonest taxpayers or close loopholes. Yes, the international corporate tax law is substantially more complex, even for honest taxpayers, as a result of attempting to curb the ability of corporations to park intellectual IP and cash overseas for the sole purpose of lowering their effective tax rate. So the analysis shouldn’t be limited to “increased complexity = bad law,” but should include a consideration of whether the complexity is worthwhile and effective at curbing abuse.

    In fact, virtually every law aimed at curbing abuse creates a burden for honest people. It sounds like the SS# has a particularly harsh, and unintended, consequence for the Amish.

    And yes, I say “abuse” knowing there is a debate that could be had about whether the tax law abuse the SS# requirement tired to solve was serious enough to warrant an attempt to solve it. I suspect the answer depends on whether or not you ever use the word “illegal” in front of “immigration.”