Saturday, July 4, 2009

Hope For The Lost Form 4361

Ministers are allowed to opt out of Self Employment tax by filing Form 4361 with the IRS. There is a slim window of time during which a minister can file the form. After being filed in triplicate with the IRS, the IRS returns an approved copy of the form to the minister.

Whenever I work with a minister that has filed Form 4361, I always tell them it is their most valuable asset. An approved Form 4361 is very difficult to replace. Without the approved form it is hard to convince an IRS agent that the minister is exempt from Self Employment tax. The courts have allowed the exemption without an approved form where the minister has retained proof that he filed the form. Apparently, a Form 4361 that is properly completed and timely filed is rarely not approved by the IRS.

Every year I come in contact with ministers who do not have copies of their approved Forms 4361. To make matters worse, they also do not have any evidence of filing the form with the IRS. In the past, I have had little guidance to give to them regarding how to obtain a duplicate of the approved form. However, the IRS recently published a Minister Audit Technique Guide reviewing all the rules regarding ministers for its agents. One of the sections explains to the IRS agent what to do if the minister cannot provide his/her Form 4361.

The IRS gives its agents three avenues for confirming the exemption:
  1. For ministers who filed the Form 4361 after 1988, the agent can order a transcript for the year under audit. Included on this transcript should be an indicator that tells the agent the minister is exempt from Self Employment tax.
  2. If the transcript is not an option, the agent can contact the Taxpayer Relations Branch at the IRS Service Center where the Form 4361 was filed and request a copy of the form.
  3. The last option is to contact the Social Security Administration in Baltimore and ask them to provide confirmation of a minister's exempt status.
I still believe that an approved Form 4361 is a minister's most valuable asset. I recommend a copy of the approved Form 4361 be given to the minister's CPA as well as placed in with all those other valuable papers, i.e. passports, birth certificates, and social security cards. If you are the minister who cannot find your approved Form 4361, you should explore the above avenues to confirm your exemption. It is better to know for sure you are exempt, then to discover you are not exempt when a large tax bill is sent your way.

12 comments:

  1. I need to get a copy of my wife's approved 4361 from the Irs. Can younhelp? She needs it to file for her Social Security since she is the resident agent in our tax exempt Christian Ministry.

    God Bless,
    Wes

    Wes

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  2. Elaine,
    I am needing to obtain proof of my 4361 as well. Could you help me?
    Thanks in advance.
    Bruce

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  3. Thank you SO MUCH for posting this information! For the first time in 25 years, the IRS questioned my husband's 4361 this year. He found all the paperwork for the form, but not the actual approval letter from the IRS. Because of the information that you posted here, we were able to fix the problem much easier than we thought.

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    1. Hi Tina, how did you get your copy?

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  4. I submitted the 4361 form back in 2003 and lost my approved copy. I've tried the IRS and the SSA and no one seems to have any idea where I can obtain a copy. Please help! I do have the copy of what I submitted but not the actual approved letter. Tina, what did you do to get your copy?

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  6. It seems like these procedures are for the IRS to use, not necessarily for a taxpayer.

    The instructions for Form 4506-T (Request for Tax Return Transcript) seem not to include the 4361

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  7. I am trying to get a Loan Modification through my lender. I have an Approved 4361 form and I have sent a copy to my lender. However, the lender is rejecting the Approved 4361 form because it says that the "names do not match on the form." My ordination was done through an organization in another state - not the church that I currently work for. My lender is saying that I need to provide a new Approved 4361 form because the one that I have is not valid. How do I provide my lender evidence that my form is valid and that the names don't have to match on the form?

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  8. Hi. You can find a blank Fillable Form 4506-T here.
    http://goo.gl/LhwQPi

    Please feel free to use it. You can fill out the form, save it, fax it, and email it.

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  10. Hello, what is the IRS's address in Baltimore?

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  11. Hi:
    Recently applied for SS benefits but am being denied. In 1977 Filed FORM 4361 exempting from SS but in 1978 (1977 Legislation) was allowed to OPT BACK IN.
    NOW SS claims they have copy of my 4029/4361 but no record of my Opting back in. I have paid SECA each year from 1978 on. Any ideas on how to document the 1978 event? In 2011 I lost all my records in a flood that hit my church.

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