Wallace M. Handeland and Lee Handeland v. Commissioner of Internal Revenue

The Handelands appeal a decision of the Tax Court in their favor. They are ministers of the Church of Scientology of Minnesota and claim to be eligible for exemption from the payment of FICA self-employment tax. On appeal they argue that the Tax Court improperly failed to make findings on their status as ministers within the exemption provision of 26 U.S.C. § 1402 (c)(4) when it found in their favor on the question of liability for FICA tax for 1967. We affirm.

Appellants were served with a deficiency notice in 1971 for failure to pay a FICA self-employment tax of $231 plus an addition to tax of $57.75 on their 1967 return. In March of 1972 they petitioned the Tax Court to have the deficiency redetermined. They asserted that no tax or penalty was owed because they were exempt ministers under § 1402(c)(4) and had not filed a waiver asking to be included in FICA pursuant to the then 26 U.S.C. § 1402 (e) (1964). They alleged that the Internal Revenue Service had issued a deficiency notice on the ground that it disputed their claim to be ministers eligible for exemption.

After first denying all of the allegations in the complaint, the CIR reversed position and sought a…