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4. Unemployment Tax. The Group Ruling establishes exemption from federal unemployment tax only. Individual states may impose unemployment tax on organizations included in the Group Ruling, even though they are exempt from the federal tax. Please refer to your attorney any questions you may have about state unemployment tax. 5. Social Security Tax. All section 501(c)(3) organizations, including churches, are required to withhold and pay taxes under the Federal Insurance Contributions Act (FICA) for each employee.?/ However, services performed by diocesan priests in the exercise of their ministry are not considered "employment" for FICA (Social Security) purposes,!/ and FICA should not be withheld from their salaries. For Social Security purposes, diocesan priests are subject to self-employment tax ("SECA") on their salaries as well as on the value of meals and housing or housing allowances provided to them.s/ Neither FICA nor income tax withholding is required on remuneration paid directly to religious institutes for members who are subject to vows of poverty and obedience and are employed by organizations included in the Official Catholic Directory.b/ 6. Federal Excise Tax. Inclusion in the Group Ruling has no effect on an organization's liability for federal excise taxes. Exemption from these taxes is very limited. Please refer to your attorney any questions you may have about excise taxes. 7. State/Local Taxes. Inclusion in the Group Ruling does not automatically establish an organization's exemption from state or local income, sales or property taxes. Typically, separate exemptions must be obtained from the appropriate state or local tax authorities in order to qualify for any applicable exemptions. Please refer to your attorney any questions you may have about state or local tax exemptions. 8. Form 990. All organizations included in the OCD must file Form 990, Return of Organization Exempt from Income Tax, unless they are eligible J Section 3121(w) of the Code permits certain church-related organizations to make an irrevocobte election to avoid payment of FICA taxes, but only if such organizations are Poo sed for roligious reasons to payment of social security taxes. I.R.G. §3121(b)(8)(A). ' 1L R. C. § 1402(x)(8). See also, Compensation of Priests, at htt2.1Aaww. usccb. orc/bishopVdfddualtax. him. Rev. Rut. 77-290, 1977-2 C.B. 26. See also, OGC/I-RCR Memorandum on Compensation of Religions, httpr/Avww.usccb.oro/ogc/RelComp2006.pdf (September 11, 2006). I 4 i I