Many of these families claimed tax deductions or credits and provided alternative evidence of identification. However, the IRS refused to grant deductions and informed the families that they owe thousands of dollars to the government. Other families chose, for conscience sake, to forego claiming the deduction for their children who do not have social security numbers and are consequently losing their right to tax relief.

Background

Prior to the passage of The Small Business Job Protection Act of 1996, Pub. L. No. 104-188, 110 Stat. 1755, the IRS was limited to imposing a $50 penalty per dependent for a taxpayer’s failure to provide a taxpayer identification number (TIN) for a dependent.

Section 1615 (a)(1) of The Small Business Job Protection Act of 1996 amended 26 U.S.C. § 151 authorizing the IRS to completely deny the dependency exemption if the dependent’s TIN is not included on the tax return. The relevant language states:

(e) Identifying information required. 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. [26 U.S.C. § 151 (e) (1998)]

Before the addition of this section, a taxpayer who failed to supply a dependent’s TIN was served a deficiency notice, which could be appealed. Now, however, a failure to provide a correct TIN is treated like a mathematical or clerical error, which cannot be appealed. The taxpayer is simply assessed the tax and required to pay without appeal.

Why Congress Should Make a Religious Exemption

Several compelling reasons support congressional action to create a religious exemption from providing identifying numbers for dependents, including:

• Some families have sincerely held religious beliefs which make them opposed to obtaining a government issued number for their minor children. Many families have voluntarily forfeited thousands of dollars worth of legitimate dependent deductions, rather than violate their religious beliefs. Taxpayers with these religious beliefs are being forced to pay for their right to exercise their religious beliefs. Thus, the current federal law prohibits these families from freely exercising their religion—a fundamental right protected by the First Amendment.

• Courts already allow similar religious exemptions for federal aid programs. Some federal aid programs require recipients to submit the social security numbers of dependents in order to receive the aid. However, courts have ruled that individuals who otherwise qualify for these benefits could not be denied funds solely because they were religiously opposed to obtaining social security numbers for their children. See Stevens v. Berger, 428 F.Supp. 896 (E.D.N.Y., 1977), and Callahan v. Woods, 736 F.2d 1269 (9th Cir., 1984). Congress should all the more allow a religious exemption for families filing their income tax returns to keep money which they rightfully earned.

• A religious exemption would not revoke the current fraud protection mechanism. The religious exemption proposed in H.R. 2494 would not revoke the fraud protection mechanism established in 26 U.S.C. § 151 (e). Any taxpayer seeking the religious exemption would be required to include birth certificates and medical records to prove the existence of his children. In addition, he would be required to submit a sworn affidavit with his tax return, explaining his sincerely held religious beliefs.

The Solution: The Children Tax ID Alternative Act (H.R. 2494)

HSLDA helped draft a bill to correct this problem, the Children Tax ID Alternative Act, H.R. 2494. It is sponsored by Congressmen John Hostettler (R-IN) and Bill Goodling (R-PA). Under this legislation, families with a religious objection will no longer be required to obtain a SSN for their children in order to claim them as dependents.

In lieu of a government-issued number, this bill requires a religious objector to produce several items:

1. A sworn affidavit from the parents describing their own religious belief;

2. An affidavit from a non-relative vouching that the children being claimed as dependents are indeed the parents’ children; and

3. Two other articles showing the relationship of the dependent to the taxpayer. The article choices include a birth certificate, medical records, insurance records or school records.

Reasons This Language Should be Added

The religious objector retains the burden of proof.

Granting this religious exemption will not cause the loss of legitimate government revenue. These families have children and are entitled to money that is rightfully theirs—not the government’s.

Conclusion

Families who qualify for a dependent deduction should be allowed to take this deduction even though they have an objection to the assignment of SSNs to their minor children. The policy of the United States should be to grant tax deductions on the basis of physical children in a family—not on the basis of identifying numbers in a family. The IRS is always able to challenge the truthfulness of any deduction. Should fraud be found, stiff penalties should be assessed.