John W. and Faythe A. Miller v. Commissioner

114 T.C. No. 32UNITED STATES TAX COURT
JOHN W. AND FAYTHE A. MILLER, Petitioners v.
COMMISSIONER OF INTERNAL REVENUE, Respondent
Docket No. 12310-98. Filed June 23, 2000.
Ps claimed dependency exemptions on their 1996
joint Federal income tax return without furnishing
SSN’s for their children, as required under sec.
151(e), I.R.C. Ps seek relief from the SSN requirement
because of their religious beliefs in opposition to
using SSN’s. Held: the SSN requirement is the least
restrictive means of achieving the Government’s
compelling interests in implementing the Federal tax
system in a uniform, mandatory way and in detecting
fraud in regard to dependency exemptions. Accordingly,
neither the Free Exercise Clause of the First Amendment
to the Constitution nor the Religious Freedom
Restoration Act of 1993, Pub. L. 103-141, sec. 2, 107
Stat. 1488, provides a basis for excepting Ps from the
SSN requirement.
John W. and Faythe A. Miller, pro se.
Elizabeth A. Owen, for respondent.
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OPINION
LARO, Judge: This case is before the Court fully
stipulated. See Rule 122. Petitioners petitioned the Court to
redetermine respondent’s determination of a $1,391 deficiency in
Federal income tax for 1996.
The issue in this case is whether requiring petitioners to
provide Social Security numbers (SSN’s) for their dependent
children as a condition to allowing their dependency deductions
violates petitioners’ right to free exercise of religion. We
hold that it does not.
Unless otherwise indicated, section references are to the
Internal Revenue Code in effect for the year in issue. Rule
references are to the Tax Court Rules of Practice and Procedure.
Dollar amounts are rounded to the nearest dollar.
Background
The stipulation of facts and the exhibits submitted
therewith are incorporated herein by this reference. Petitioners
resided in Sugar Land, Texas, when the petition was filed.
Petitioners are the natural parents of two children, whom
they claimed as dependents on their 1996 Federal income tax
return. At the end of 1996, petitioners’ children were 8 and 5
years old. Rather than provide SSN’s for their children on their
return, petitioners attached a notarized affidavit declaring
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their religious objection to the use of identifying numbers for
their children.
Petitioners believe that SSN’s are universal numerical
identifiers to be equated with the “mark of the Beast” warned
against in the Bible at Revelation 13:16-17. Petitioners both
have SSN’s and used them on their 1996 tax return but wish to
avoid obtaining SSN’s for their children.
Petitioners’ religious objections extend only to universal
identifiers and not to numbers issued for a discrete purpose.
Accordingly, petitioners have offered to obtain Individual
Taxpayer Identification Numbers (ITIN’s) for their children and
provide the ITIN’s on their return. Respondent, however, refuses
to issue ITIN’s to petitioners’ children because respondent takes
the position that Treasury regulations permit issuance of ITIN’s
only to those who are ineligible to receive SSN’s.
Except for the requirement that petitioners include their
children’s SSN’s on their return, petitioners have met all the
statutory requirements for claiming dependency exemptions in
1996. Respondent concedes that petitioners have a sincerely held
religious belief which opposes the use of SSN’s for their minor
children, but respondent denies that he is required to
accommodate that belief in administering the dependency
exemption.
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Discussion
I. The SSN Requirement
Under section 151, taxpayers are entitled to claim an
exemption for each dependent child. However, section 151(e)
provides: “No exemption shall be allowed under this section with
respect to any individual unless the TIN of such individual is
included on the return claiming the exemption.”1 Thus, without
providing TIN’s, petitioners cannot properly claim any section
151 exemptions for their children.
Section 7701(a)(41) defines the term “TIN” for purposes of
the Internal Revenue Code to mean “the identifying number
assigned to a person under section 6109.” Section 6109(d)
specifies that the SSN issued to an individual is the identifying
number of the individual, except as otherwise specified under
applicable regulations. The regulations provide that an
individual required to furnish a TIN must use an SSN unless the
individual is not eligible to obtain an SSN. See sec. 301.6109-
1(a)(ii)(A) and (B), Proced. & Admin. Regs. The regulations
further specify that “Any individual who is duly assigned a
Social Security number or who is entitled to a Social Security
1
Sec. 151(e) was added to the Code by the Small Business Job
Protection Act of 1996 (SBJA), Pub. L. 104-188, sec. 1615(a)(1),
110 Stat. 1755, 1853, and is generally effective for returns due
after Sept. 19, 1996. However, for dependents claimed for the
1996 taxable year, the Act requires TIN’s for any children born
on or before Nov. 30, 1996. See SBJA sec. 1615(d)(2), 100 Stat.
1853.
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number will not be issued an IRS individual taxpayer
identification number.” Sec. 301.6109-1(d)(4), Proced. & Admin.
Regs.2
SSN’s are issued by the Social Security Administration of
the U.S. Department of Health and Human Services (the SSA) upon
application by a citizen, qualified alien, or by a parent on
behalf of a qualified child. See generally 20 C.F.R. secs.
422.101 to 422.112 (2000). The issuance of an SSN entails
several consequences, including (i) the creation of a record at
the SSA of that person’s earnings for purposes of determining the
old-age and other benefits to which the person may be entitled,
and (ii) establishing a unique numerical identifier for the
individual for use by a variety of governmental and private
entities.3 When the SSN was first chosen as the identification
2
Sec. 301.6109-1(d)(4), Proced. & Admin. Regs., was added to
the regulations by T.D. 8671, 1996-1 C.B. 314, and is effective
for any return, statement, or other document required to be filed
after Dec. 31, 1995. Previously, respondent had issued ITIN’s to
taxpayers who claimed religious objections to the use of SSN’s.
See Wolfrum v. Commissioner, T.C. Memo. 1991-370, affd. 972 F.2d
350 (6th Cir. 1992).
3
In addition to tax administration, SSN’s are used by
Federal and State Governments to administer public assistance
programs, veteran’s benefits, driver’s licences, motor vehicle
registrations, Federal student grants and loans, child support
obligations, the Selective Service System, blood donations, and
jury selection. SSN’s are also commonly used in the private
sector by credit bureaus, banks, schools, and medical
recordkeepers. See Komuves, “We’ve Got Your Number: An Overview
of Legislation and Decisions to Control the Use of Social
Security Numbers as Personal Identifiers”, 16 J. Marshall J.
(continued...)
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number for tax purposes, the rationale for the choice was that
most people already had an SSN and thus the use of that pre-
existing number would relieve taxpayers of an additional burden.
See H. Rept. 1103, 87th Cong., 1st Sess. 3 (1961); S. Rept. 1102,
87th Cong., 1st Sess. 3 (1961), 1961-2 C.B. 475.
II. The Religious Freedom Restoration Act of 1993
Petitioners assert that requiring them to furnish SSN’s for
their children as a condition to obtaining the dependency
exemptions is an unconstitutional intrusion on the free exercise
of their religion. The First Amendment to the Constitution
provides, in relevant part, that: “Congress shall make no law
respecting an establishment of religion, or prohibiting the free
exercise thereof.” (Emphasis added.)
In Bowen v. Roy, 476 U.S. 693 (1986), the Supreme Court
considered whether a Federal statute requiring applicants for
Federal welfare assistance to obtain and furnish SSN’s for their
children was constitutional as applied to two Native American
applicants who held a religious belief that the use of the number
would harm their daughter’s spirit. Part III of the opinion of
Chief Justice Burger, joined by two other Justices, rejected the
strict scrutiny test applied by the trial court, concluding that
there is no violation of the Free Exercise Clause of the First
3
(...continued)
Computer & Info. L. 529 (Spring 1998).
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Amendment when the Government demonstrates “that a challenged
requirement for government benefits, neutral and uniform in its
application, is a reasonable means of promoting a legitimate
public interest.” Id. at 708. The four dissenting Justices
would have required the Government to show that its refusal to
accommodate the appellants’ religious objection to the use of
SSN’s served a compelling State interest.4
In Employment Div. v. Smith, 494 U.S. 872 (1990), the
Supreme Court reviewed a claim that the Free Exercise Clause
permitted the ingestion of a prohibited drug, peyote, in the
context of the worship of the Native American Church. In so
doing, the Court held that a “neutral, generally applicable law
need not be justified by a compelling governmental interest even
if the law has the incidental effect of burdening a particular
religious practice.” Id. at 886 n.3.
In response to Smith, Congress enacted the Religious Freedom
Restoration Act of 1993 (RFRA), Pub. L. 103-141, sec. 2, 107
Stat. 1488, 42 U.S.C. secs. 2000bb to 2000bb-4 (1994).5 A
person whose religious exercise is burdened in violation of the
4
Justice White wrote separately from the other three
dissenters, stating simply that he believed Thomas v. Review Bd.,
450 U.S. 707 (1981), and Sherbert v. Verner, 374 U.S. 398 (1963),
to be controlling.
5
In City of Boerne v. Flores, 521 U.S. 507 (1997), the
Supreme Court held that RFRA was unconstitutional as applied to
State and local laws. We assume without holding that the RFRA is
constitutional as applied to the Federal Government.
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RFRA “may assert that violation as a claim or defense in a
judicial proceeding and obtain appropriate relief against a
government”. RFRA, 42 U.S.C. sec. 2000bb-1(c). A claimant under
the RFRA must show that the Government “substantially burdened”
his or her free exercise of religion. RFRA, 42 U.S.C. sec.
2000bb-1(a). Upon such a showing, the Government must
demonstrate that the application of the burden to the person (i)
is in furtherance of a compelling governmental interest and (ii)
is the least restrictive means of furthering that compelling
interest. RFRA, 42 U.S.C. sec. 2000bb-1(b). The Government’s
burden is both of production and persuasion. RFRA, 42 U.S.C.
sec. 2000bb-2(3).
III. Substantial Burden
Petitioners seek dependency exemptions which, over a number
of years, may be worth several thousands of dollars to them. In
order to secure this benefit, which is available to similarly
situated parents, petitioners must obtain and use SSN’s for their
children. Respondent concedes this would violate a central tenet
of petitioners’ religion. Thus, petitioners’ argument that the
SSN requirement imposes a cognizable burden on their freedom of
religion may find some support under First Amendment case law.
See Thomas v. Review Bd., 450 U.S. 707, 717-718 (1981) (“Where
the State conditions receipt of an important benefit upon conduct
proscribed by a religious faith * * * a burden upon religion
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exists."). But see Patterson v. Commissioner, T.C. Memo. 1989-
193, affd. without published opinion 896 F.2d 544 (2d Cir. 1990)
(imposing higher tax rates on taxpayer who could not divorce or
legally separate because of his religious beliefs was not an
unconstitutional burden on his free exercise rights); In re
Turner, 193 Bankr. 548 (Bankr. N.D. Cal. 1996) (requiring use of
SSN on bankruptcy forms does not impose a “substantial burden”
under the RFRA on form preparer with religious objections to use
of the number). Nevertheless, we do not find it necessary to
determine whether petitioners’ free exercise of religion is
substantially burdened by the SSN requirement because, as
discussed below, respondent has satisfied the compelling interest
test.
IV. Compelling Government Interest Test
Under the RFRA, the Government may impose a substantial
burden on the free exercise of religion if it demonstrates that
the application of the burden is the least restrictive means of
achieving a compelling governmental interest. See RFRA, 42
U.S.C. sec. 2000bb-1(b) (1994); Adams v. Commissioner, 110 T.C.
137 (1998), affd. 170 F.3d 173 (3d Cir. 1999).
We find that the Government has a compelling interest in
effectively tracking claimed dependency exemptions. Through
cross-matching of the SSN’s respondent can easily identify
whether an SSN has been claimed on another return for the year,
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thereby detecting erroneous or fraudulent claims. For example,
SSN’s make it easier for the IRS to determine whether divorced
parents are both trying to claim their children as dependents.
Congress acknowledged this benefit in 1994, when it eliminated an
exception to the TIN requirement for dependents below a certain
age:
The requirement that TIN’s be provided with respect to each
dependent claimed on a tax return has significantly reduced
the improper claiming of dependents. Requiring that TIN’s
be supplied regardless of the age of the dependent will
further reduce the improper claiming of dependents. [H.
Rept. 103-826, at 196 (1994) (discussing sec. 742(b) of the
Uruguay Round Agreements Act, Pub. L. 103-465, 108 Stat.
4809, 5010 (1994)).]
The use of SSN’s also helps ensure that there is indeed a person
in existence to support the claimed exemption. See U.S. General
Accounting Office, Tax Administration IRS Could Do More to Verify
Taxpayer Identities (Pub. No. GAO/GGD 95-148) (Aug. 30, 1995)
(describing the difficulty in tracking individuals without
correct TIN’s in the IRS computer system).
Enforcing the SSN requirement also supports the Government’s
compelling interest in implementing the Federal tax system in a
uniform, mandatory way. See Hernandez v. Commissioner, 490 U.S.
680 (1989); United States v. Lee, 455 U.S. 252 (1982); Adams v.
Commissioner, supra. This interest extends both to the
imposition of taxes and to the administration of the tax system.
See Steckler v. United States, 81 AFTR 2d 98-1049, at 98-1052,
98-1 USTC par. 50,219, at 83,408 (E.D. La. 1998) (requirement
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under section 3401(a)(1) that taxpayer’s SSN be disclosed when
redeeming Treasury bonds was the least restrictive means of
meeting the Government’s compelling interests “in collecting
taxes fairly, in administering its tax system properly, and in
making sure all citizens participate in that system on equal
terms”).
Petitioners argue that enforcing the SSN requirement against
them is not the least restrictive means of achieving these
government interests because the IRS waives the SSN requirement
for taxpayers who qualify for exemption from Social Security
taxes under section 1402(g). This practice was acknowledged in
the legislative history accompanying the enactment of the TIN
requirement of former section 6109(e),6 in the Tax Reform Act of
1986, Pub. L. 99-514 100 Stat 2085:
The conferees note that certain taxpayers, because of their
religious beliefs, are exempted from Social Security self-
employment taxes (section 1402(g)). The conferees intend
that these taxpayers and their dependents who currently
acquire their TIN’s from the IRS continue to be permitted to
6
Former sec. 6109(e) required a taxpayer who claimed the
deduction for the dependency exemption under sec. 151(c) to
provide the dependent's TIN. Sec. 151(e) requires the same
information as did former sec. 6109(e) but changes the
enforcement mechanism for the TIN requirement from an information
reporting penalty to a disallowance of the deduction.
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do so.7 [H. Conf. Rept. 99-841 (Vol. II), at II-790 (1986),
1986-3 C.B. (Vol. 4) 1, 790.]
We do not find that this IRS practice establishes that
accommodation is feasible in this case. Taxpayers who are
exempted from Social Security employment taxes under section
1402(g) include only those who are members of an established
religious sect opposed to public or private insurance and who
have waived Social Security benefits.8 See Wolfrum v.
Commissioner, T.C. Memo. 1991-370. The creation of a general
religious exemption to the dependent TIN requirement would have a
far greater impact on respondent’s administration of the
dependency exemption and would increase the risk of fraudulent
claims being made.9 We cannot say that the balance struck by
respondent in excusing only those who are statutorily exempted
from participation in the Social Security system is
constitutionally impermissible.
7
Though the legislative history refers to an IRS practice of
issuing ITIN’s to the dependents of taxpayers exempted under sec.
1402(g), respondent acknowledged on brief that the IRS’
longstanding practice has been to excuse these taxpayers from the
TIN requirement entirely. See also Chief Counsel Advice
1999-50-034 (Oct. 21, 1999).
8
Petitioners acknowledge that they are not eligible to claim
exemption under sec. 1402(g).
9
In 1997 alone there were more than 2.5 million instances
where TIN’s required to claim dependency exemptions and the
Earned Income and Child Care Tax Credits were either missing or
did not match IRS or SSA records for the name used. See I.R.S.
News Release, IR-98-25 (Mar. 25, 1998).
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We also reject petitioners’ suggestion that respondent could
accommodate petitioners’ religious beliefs by issuing ITIN’s to
petitioners’ children. We find that issuing ITIN’s would be a
less effective means of detecting fraud than requiring SSN’s.
For one, issuing an ITIN to an individual who is otherwise
eligible to receive an SSN creates the risk that the individual
will thereafter obtain an SSN. The individual will then have two
TIN’s, each intended by the system to be a unique identifier. In
such case, cross-matching of the individual’s TIN’s would not
reveal the existence of a duplicate claim.
We have considered all of the other arguments made by
petitioners and, to the extent we have not addressed them, find
them to be without merit.
In accordance with these findings, we hold that petitioners
are not exempt from furnishing SSN’s for their children in
claiming them as dependents.
Decision will be entered for
respondent.