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D-2 | Civil Law Considerations—Financial Law
by the Code and other applicable laws. Finally, the
employing organization is responsible for all required
income tax and employment tax (FICA, Medicare,
etc.) withholding.
Employment Status
Determination
The IRS has identified twenty (20) criteria for use
in determining whether an individual is properly
classified as an employee or an independent con-
tractor. These criteria include: instruction; train-
ing; integration; services rendered personally; hir-
ing, supervising, and paying assistants; continuing
relationship; set hours of work; full-time service;
working on employer’s premises; order or sequence
set; oral or written reports; payment by hour, week,
or month; payment of business expenses; furnish-
ing of tools; significant investment; realization of
profit or loss; working for more than one firm; ser-
vices available to the public; right to discharge;
and, right to terminate.
3
Although all facts and cir-
cumstances must be considered, the right to direct
and control the performance of services is the key
factor in determining one’s status as an employee.
The application of the twenty factors predictably
results in the classification of religious workers who
perform services for dioceses, eparchies, or other
church employers as employees.
Employers report an employee’s wages on IRS
Form W-2 and a non-employee’s compensation on
an IRS Form 1099 series return.
4
A religious worker
(or seminarian) must provide either a social security
number (SSN) or an individual tax identification
number (ITIN) to facilitate these required filings.
The SSN or ITIN is required on an income tax
return filed by a religious worker (or seminarian).
Social Security Number
An individual who is legally admitted to the United
States for permanent residence or who is in other
visa categories that authorize US employment is
3
See
Rev. Rul. 87-41, 1987-1 CB 296. The IRS has also relied on
an approach emphasizing three main factors: behavioral control,
financial control, and type of relationship between the parties, to
determine status as employee or independent contractor.
See
IRS
Publication 15-A,
Employer’s Supplemental Tax Guide
, for additional
discussion of employee classification issues.
4 A different form is used for non-employee income of nonresident
aliens.
eligible to obtain an SSN,
5
which is obtained by fil-
ing Form SS-5, available from the Social Security
Administration (SSA). The SSA will contact CIS
to verify the individual’s immigration status before
issuing an SSN.
Individual Taxpayer
Identification Number
The IRS will issue an individual taxpayer identifica-
tion number to a nonresident alien or resident alien
who does not have and is not eligible to obtain an
SSN.
6
The ITIN is used for tax purposes only. The
ITIN is not to be used as proof of identity for nontax
purposes, for example, to obtain a driver’s license,
legal residency, to seek employment in the United
States, or to claim welfare or health benefits. The
ITIN is obtained by filing Form W-7,
Application for
Individual Taxpayer Identification Number
.
Case Study 1
Father A. immigrated to the United States and even-
tually qualified for US citizenship. He was employed
as a chaplain in a Catholic hospital. Father A. used
the hospital’s status under the USCCB Group Ruling
and the hospital letterhead without the knowledge or
authorization of appropriate hospital officials or of the
diocese. With these pieces of “official representation,”
Father A. began recruiting religious workers from his
country of origin and sponsoring them for R-1 visa sta-
tus. He misrepresented that paid hospital ministry jobs
were available. He also charged each religious worker
a $2,000 fee, which he justified on the grounds that he
was providing housing and food for these workers in his
own home. Upon arrival, the religious workers accom-
panied Father A. to the hospital as unauthorized,
unpaid “volunteers.” After the hospital became aware
of his unauthorized R-1 visa operation, it terminated
Father A.’s employment. This left the illicitly recruited
religious workers stranded without employment, hous-
ing, or means of support.
This case illustrates immigration fraud. It also
highlights the need for coordinating monitoring and
reporting by Church employers to prevent such fraud.
5 IRC § 6109(d); Treas. Reg. § 301.6109-1(d)(4).
6 Treas. Reg. § 301.6109-1(d)(3)(ii).