Appeal from a Decision of the United States Tax Court. Tax Ct. No. 20958-91. Original Opinion Previously Reported at:,.
Before: Cecil F. Poole and Stephen Reinhardt, Circuit Judges, and Jack E. Tanner,*fn1 District Judge. Opinion by Judge Poole.
Order AND AMENDED OPINION
Martin Droz appeals pro se the tax court's decision upholding the Commissioner's determination of a tax deficiency attributable to $5,748.98 of unpaid self-employment Social Security taxes for tax year 1988. Droz did not pay the taxes on the ground that he had religious objections to the Social Security system. Because Droz did not belong to a religious organization, he did not qualify for an exemption from the taxes under 26 U.S.C. § 1402(g). That section exempts members of religious sects that have tenets or teachings opposed to participation in the Social Security system and that provide reasonable support to their dependent members. Droz contends that denying him an exemption violates the Free Exercise and Establishment Clauses of the First Amendment and denies him due process and equal protection. We disagree, and we affirm.
Taxpayers who earn self-employment income must pay a self-employment tax into the Social Security system. 26 U.S.C. §§ 1401(a)-(b), 1402(b). Section 1402(g)(1) exempts members of certain religious sects:
An individual may file an application . . . for an exemption from the tax imposed by this chapter if he is a member of a recognized religious sect or division thereof and is an adherent of established tenets or teachings of such sect or division by reason of which he is conscientiously opposed to acceptance of the benefits of any private or public insurance which makes payments in the event of death, disability, old-age, retirement or makes payments toward the cost of, or provides services for, medical care . . . .
An application for exemption must contain evidence of the applicant's membership in and adherence to the tenets of the sect, and it must contain a waiver of all Social Security benefits. 26 U.S.C. § 1402(g)(1)(A)-(B). In addition, the Secretary of Health and Human Services must find that the applicant's sect (1) espouses tenets or teachings opposed to the Social Security system; (2) has for a substantial period of time made a practice of providing for its dependent members; and (3) has been in existence since December 31, 1950. Id. § 1402(g)(1)(C)-(E).
Droz concedes that he is not a member of a religious sect and is therefore ineligible for a § 1402(g) exemption. He argues, however, that his exclusion from the exemption on the ground that he is not a member of a religious sect violates his constitutional rights in three ways: (1) it violates his free exercise rights under the First Amendment; (2) it requires the government to choose between individuals who share identical religious beliefs in violation of the Establishment Clause; and (3) it denies him due process and equal protection by discriminating against persons with religious beliefs who do not belong to a religious sect.*fn1
A. Free Exercise Challenge
The tax court correctly presumed that Droz's objections were based upon sincere religious beliefs. See, e.g., United States v. Lee, 455 U.S. 252, 257, 71 L. Ed. 2d 127, 102 S. Ct. 1051 (1982); Thomas v. Review Bd. of Indiana Employment Sec. Div., 450 U.S. 707, 716, 67 L. Ed. 2d 624, 101 S. Ct. 1425 (1981). The tax court properly rejected Droz's argument that denying him an exemption violated his First Amendment right to freely exercise those beliefs.
To determine whether a government regulation impermissibly burdens an individual's First Amendment right to freely exercise his religious beliefs, a court must decide whether that regulation substantially burdens a sincerely held religious belief; whether the burden is justified by a compelling state interest; and whether the regulation is narrowly tailored to achieve that interest. Vernon v. City of Los Angeles, 27 F.3d 1385, 1392 (9th Cir. 1994) (citing Sherbert v. Verner, 374 U.S. 398, 403, 10 L. Ed. 2d 965, 83 S. Ct. 1790 (1963); Thomas, 450 U.S. at 718).*fn2
The controlling case in this analysis is United States v. Lee, in which the Supreme Court upheld the imposition of Social Security taxes on an Amish employer who failed to pay the taxes on his own behalf and failed to withhold the taxes from the wages of his Amish employees. 455 U.S. at 254.*fn3 The Court determined that participation in the Social Security system interfered with Lee's free exercise rights. Id. at 258-59. It held, however, that the government had a compelling interest in enforcing participation in the Social Security system in order to insure the "fiscal vitality" of a system designed to serve the ...