MEMORANDUM FINDINGS OF FACT AND OPINION
DAWSON, Judge: This case was assigned to Special Trial Judge Francis J. Cantrel for the purpose of conducting the hearing and ruling on respondent's motion for summary judgment filed herein.After a review of the record, we agree with and adopt his opinion which is set forth below. 1
OPINION OF THE SPECIAL TRIAL JUDGE
CANTREL, Special Trial Judge: This case is presently before the Court on respondent's motion for summary judgment filed on April 30, 1980, pursuant to Rule 121, Tax Court Rules of Practice and Procedure.2
Respondent, in his notice of deficiency issued to petitioners on April 19, 1978, determined a deficiency in their Federal income tax for the taxable calendar year 1975 in the amount of $1,113.90. The issues for decision are (1) whether petitioners are liable for the tax on self-employment income under section 1401 and 1402, Internal Revenue Code, 3 for the year 1975; (2) whether petitioners are exempt from self-employment tax under section 1402 on the basis of petitioner Richard F. Warner's belief that the social security system is economically unsound; and (3) whether section 1402 is unconstitutional in that it exempts from payment of self-employment tax those individuals whose religious beliefs as members of a recognized religious order forbid the payment to or acceptance of benefits from a fund such as the social security insurance administration.
The procedural sequence of events resulting in this case began with the issuance of the notice of deficiency to petitioners on April 19, 1978.On July 5, 1978, Richard F. Warner (petitioner) filed an imperfect petition. Thereafter, and pursuant to Court order dated July 10, 1978, petitioners, on September 11, 1978, filed an amended petition, to which respondent timely filed an answer on November 1, 1978. When this case was called for trial at Cleveland, Ohio, on October 16, 1979, it was continued generally. Subsequently, on November 2, 1979, the parties filed a joint motion to file a stipulation of facts. That motion, which was accompanied by a stipulation of facts with attached exhibits, was granted by the Court on November 7, 1979, on which date the stipulation of facts was filed. The facts so stipulated are incorporated herein by this reference.Respondent's motion herein being considered, which was filed on April 30, 1980, had attached thereto an affidavit and exhibits.
FINDINGS OF FACT
Petitioners resided at 28999 Gates Mills Boulevard, Cleveland, Ohio, on the date their petition was filed. They timely filed a joint 1975 Federal income tax return with the Internal Revenue Service Center at Cincinnati, Ohio. Throughout 1975 petitioner was self employed, and on their 1975 return petitioners reported a self-employment net profit of $20,182.08. Attached to that return was a Schedule SE, "Computation of Social Security Self-Employment Tax", wherein a self-employment tax for petitioner in the amount of $1,113.90 was reported, but not paid. That figure was crossed out and thereafter appeared an asterisk with the following statement:
Exemption claimed on ground of conscientious opposition to acceptance of any public insurance benefits including those established by the Social Security Act.
On or about July 9, 1977, petitioner filed an application for exemption from tax on self-employment income and waiver of benefits (hereinafter Form 4029) with the Internal Revenue Service. 4 That application was disapproved by the Internal Revenue Service on August 12, 1977, on which date by letter petitioner was notified by the Service that his application was disapproved as he did not meet the requirements for exemption undersection 1402(h)5 in that, "You are not a member of any recognized religious group."
No valid application for waiver of benefits and exemption from self-employment tax was filed by petitioners on or before the date for which a return was due for the first year for which petitioners had self-employment income. No such application was filed prior to the last day of the third month following the month in which the Secretary of the Treasury notified petitioners in writing for the first time that an application was not filed.
Petitioners are not members and do not claim to be members of any recognized religious group, the established teachings of which oppose the receipt of benefits from public or private insurance which makes payments in the event of death, disability, old age, or retirement, or makes payments toward the cost of, or provides services for, medical care.
Petitioners' net earnings from self-employment income in 1975 exceeded $ 400 and are subject to the tax imposed by section 1401.
OPINION
Petitioners claim exemption from the tax on self-employment income on the basis of their conscientious objection to participation in either the benefits or the support of the Social Security Act, the provisions of which are economically unsound.Moreover, they contend that the provisions of section 1402(h) are unconstitutional in that they are violative of their rights under the First and Fourteenth Amendments of the U.S. Constitution.
Section 1401 imposes a tax on "the self-employment income of every individual", as defined in section 1402. Section 1402(b) defines self-employment income as "the net earnings from self-employment derived by an individual * * * during any taxable year; * * *." Section 1402(a) defines net earnings from self-employment as "the gross income derived by an individual from any trade or business carried on by such individual, less the deductions allowed by this subtitle which are attributable to such trade or business, * * *."
Petitioners do not maintain that they are not subject to self-employment tax on the basis that they received no self-employment income. Indeed, they cannot, as the record is clear that petitioner received net earnings from self employment of $ 20,182.08. Thus, by the clear terms of the statute, petitioners are liable for self-employment tax unless they can show they are exempt from the payment thereof.
The law is well settled that the social security system is constitutional. Steward Machine Co. v. Davis, 301 U.S. 548 (1937); Helvering v. Davis, 301 U.S. 619 (1937). Self-employed individuals can be subjected to the tax supporting the social security system just as those considered to be employees are subjected to such tax. Cain v. United States, 211 F.2d 375, 377 (5th Cir. 1954), cert. denied 347 U.S. 1013 (1954). 6
We are mindful of petitioners' strong feelings and sincere beliefs in urging, in support of their position, that the social security system is economically unsound. However, those are political considerations to be properly addressed to the Congress and not to this Court.
Petitioners' contention that the exemption from the self-employment tax provided by section 1402(h) to "members of certain religious faiths" is unconstitutional in that it conflicts with the establishment and free exercise clause of the First Amendment is simply without merit. in Henson v. Commissioner, 66 T.C. 835, 838 (1976), we stated:
This Court has previously considered the arguments made herein by petitioner in William E. Palmer, 52 T.C. 310 (1969), and several subsequent Memorandum Opinions and has upheld the constitutionality of the statute.In Palmer we recognized that the Social Security Act had been held to be constitutional and went on to hold that this particular tax did not constitute an unlawful encroachment upon the free exercise of the taxpayer's religion. * * * 7 [Footnote omitted.]
Furthermore, a prerequisite to the granting of an application for exemption from self-employment tax is that the applicant be a member of a recognized religious sect or division thereof and an adherent of established tenets or teachings of such sect 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, or retirement or makes payments towards the cost of, or provides services for, medical care (including the benefits of any insurance system established by the Social Security Act). 8 Petitioners have stipulated they are not members of any such sect or division thereof. For that reason alone, they are not entitled to an exemption from self-employment tax.
Finally, in essence, petitioners argue that section 1402(h) violates their Fifth Amendment, due process, rights. 9 That argument is, likewise, without merit. The taxpayer in Henson v. Commissioner, supra, also contended that the separate exemptions provided in section 1402(e) violated her Fifth Amendment constitutional rights under section 1402(h). Citing the Supreme Court in Carmichael v. Southern Coal Co.,301 U.S. 495, 509 (1937), this Court stated in Henson v. Commissioner, supra at 840:
It is inherent in the exercise of the power to tax that a state be free to select the subjects of taxation and to grant exemptions.* * * This Court has repeatedly held that inequalities which result from a singling out of one particular class for taxation or exemption, infringe no constitutional limitation. * * *
In Henson v. Commissioner, supra, we concluded by saying:
We find that the different requirements for exemption from tax provided for the different classifications under sections 1402(e) and (h) have a rational basis and do not arbitrarily deprive petitioner of her right to due process of law. See Abney v. Campbell, 206 F.2d 836 (5th Cir. 1953), cert. denied 346 U.S. 924 (1954). Nor do they provide for "an establishment of religion" or interfere with petitioner's "free exercise" of her religion. See William E. Palmer, supra, and the Memorandum Opinions following Palmer cited in n.5.
We observe that the exemption from self-employment tax provided by section 1402(h) is expressly conditioned on filing a proper application for exemption.Such application procedure is mandatory. See Devine v. Commissioner, T.C. Memo. 1980-511. It is clear that petitioners did not comply with those procedures, and any exemption from self-employment tax would fail on that ground, too. 10
The record is clear that there is no genuine issue as to any material fact. In such circumstances, Rule 121(b) permits this Court to render a decision as a matter of law. Since respondent has demonstrated that he is entitled to prevail as a matter of law, his motion for summary judgment filed on April 30, 1980, will be granted.
An appropriate order and decision will be entered.