In Program Manager Technical Assistance (PMTA), IRS has concluded that it can properly deny the child tax credit to persons who have religious or conscience-based objections to obtaining social security numbers (SSNs) for their children, because such a denial does not violate the Religious Freedom Restoration Act of 1993.
Background—administrative exceptions to social security number requirements. Under Code Sec. 151(e), a taxpayer claiming a personal exemption deduction for any individual must provide “the TIN of such an individual… on the return claiming the exemption.” A TIN, or a taxpayer identification number, may be an SSN, an individual taxpayer identification number (ITIN) or an adoption taxpayer identification number (ATIN).
IRS has issued Chief Counsel Advice 199950034, which applies an administrative exception to the TIN requirement under Code Sec. 151(e). Under this exception, IRS permits taxpayers with religious or conscience-based objections to obtain SSNs to claim the personal exemption deduction without providing any TIN.
This administrative exception, however, does not apply to Code Sec. 32 (earned income credit or EIC). Code Sec. 32(c), by way of Code Sec. 32(m), requires that an eligible taxpayer seeking the EIC based on a qualifying child include the child’s SSN. IRS does not permit taxpayers who object to obtaining SSNs to claim the EIC without SSNs.
Although the personal exemption deduction is suspended for tax years 2018 through 2025, IRS continues to apply the administrative exception to certain other dependent tax benefits.
Background—child tax credit. Code Sec. 24 provides for a child tax credit (CTC). Before the enactment of the Tax Cuts and Jobs Act (TCJA) substantially amended Code Sec. 24, the credit was $1000 per qualifying child, and the taxpayer was required to provide each qualifying child’s taxpayer identification number to receive the CTC (Code Sec. 24(e)). The pre-TCJA Code Sec. 24 did not require a qualifying child’s SSN. IRS applied the administrative exception developed for Code Sec. 151(e) to the CTC.
Besides changing the amount of the credit (Code Sec. 24(a), the TCJA requires taxpayers to provide an SSN for each qualifying child in order to receive the CTC. (Code Sec. 24(h)(7)) The TCJA also provides a partial ($500) CTC (popularly known as the credit for other dependents or ODC) for any qualifying dependent who is not a qualifying child. (Code Sec. 24(h)(4)) Among the persons that qualify for the ODC is any qualifying child ineligible to be claimed for the full CTC solely because the child does not have an SSN. (Code Sec. 24(h)(4)(C))
Background—Religious Freedom Restoration Act of 1993. Under the Religious Freedom Restoration Act of 1993 (RFRA; 42 USC §2000bb et seq.), the government may not substantially burden the free exercise of religion, even if a statute is facially neutral and applies to all applicants, unless it demonstrates that the burden (1) is in furtherance of a compelling governmental interest, and (2) is the least restrictive means of furthering that interest. The “least restrictive means” test requires the government to show that it cannot accommodate the religious adherent while achieving its interest through a viable alternative, which may include expending additional funds, modifying existing exemptions, or creating a new program. (Burwell v. Hobby Lobby Stores, Inc., (S Ct 2014) 573 U.S. 682)
Full CTC not available where religious objection to SSN. In the PMTA, IRS concluded that, in implementing Code Sec. 24(h)(7), it has compelling governmental interests to ensure uniform and orderly tax administration and to prevent improper CTC claims. For IRS, the least restrictive, and the only, means to further those compelling interests is to require a qualifying child’s SSN. As a result, IRS concluded that it is not required to, and will not, allow taxpayers with religious or conscience-based objections to obtaining SSNs, to take the full CTC with respect to their children.
In arriving at this conclusion, the PMTA noted:
…The strict application of the requirement for an SSN may substantially burden taxpayers who, because of their sincerely held belief, object to obtaining SSNs for their otherwise qualifying children, thereby losing entitlement to the CTC.
…In light of the unambiguous language of Code Sec. 24(h)(7), the least restrictive, and indeed the only, means to further its compelling interests is to require a qualifying child’s SSN for CTC purposes. IRS has no viable alternative to implement “this clear congressional mandate” to require an SSN for a qualifying child. Administering the pre-TCJA CTC under IRS’s existing administrative exception to the TIN requirement of Code Sec. 151(e) was reasonable, because a “taxpayer identifying number” referred to in Code Sec. 24(e) means not only an SSN, but also an ITIN, ATIN, or other taxpayer identification number that IRS may define. It is unreasonable, however, to expand this exception to the realm of Code Sec. 24(h)(7) because the statute clearly requires an SSN of a qualifying child. If IRS were to expand the existing administrative exception to Code Sec. 24(h)(7) in an attempt to provide a less burdensome method for obtaining a taxpayer identifying number, IRS would be ignoring the mandate in the statute that specifically calls for a particular type of identifying number (an SSN).