[Federal Register Volume 69, Number 161 (Friday, August 20, 2004)]
[Rules and Regulations]
[Pages 51553-51556]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 04-19118]


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SOCIAL SECURITY ADMINISTRATION

20 CFR Part 404

[Regulation No. 4]
RIN 0960-AG01


Federal Old-Age, Survivors and Disability Insurance; Coverage of 
Residents in the Commonwealth of the Northern Mariana Islands (CNMI); 
Coverage of Ministers, Members of the Clergy and Christian Science 
Practitioners

AGENCY: Social Security Administration.

ACTION: Final rule.

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SUMMARY: We are revising several sections of our regulations to reflect 
that, for purposes of the title II benefit program (title II of the 
Social Security Act), we consider the Commonwealth of the Northern 
Mariana Islands (CNMI) to be a part of the United States. The revisions 
take into account the status of the CNMI under current law and explain 
the coverage rules for work performed in the CNMI. The revisions also 
explain that the alien nonpayment provisions, which generally place 
limits on the payment of title II benefits to aliens (i.e. non-United 
States citizens or nationals) who are outside the United States, do not 
apply to aliens in the CNMI. We are also revising our title II rules on 
coverage for ministers, members of religious orders, or Christian 
Science practitioners, to reflect a provision in the Ticket to Work and 
Work Incentives Improvement Act of 1999 that allows a duly ordained, 
commissioned or licensed minister, a member of a religious order, or a 
Christian Science practitioner who previously opted not to be covered 
under Social Security, a two-year window in which to make an 
irrevocable election to be covered.

DATES: Effective Date: These regulations are effective on September 20, 
2004.

FOR FURTHER INFORMATION CONTACT: Robert J. Augustine, Social Insurance 
Specialist, Office of Regulations, Social Security Administration, 100 
Altmeyer Building, 6401 Security Boulevard, Baltimore, MD 21235-6401, 
(410) 965-0020 or TTY (410) 966-5609, for information about this 
notice. For information on eligibility or claiming benefits, call our 
national toll-free number, 1-800-772-1213 or TTY 1-800-325-0778, or 
visit our Internet Web site, Social Security Online, at http://www.socialsecurity.gov.
    Electronic Version: The electronic file of this document is 
available on the date of publication in the Federal Register at http://www.gpoaccess.gov/fr/index.html. It is also available on the Internet 
site for SSA (i.e., Social Security Online) at http://policy.ssa.gov/pnpublic.nsf/LawsRegs.

SUPPLEMENTARY INFORMATION:

A. CNMI Changes

    Under Public Law Number 94-241 enacted on March 24, 1976, and 
codified at 48 U.S.C. 1801, section 502(a) of the Covenant to Establish 
a Commonwealth of the Northern Mariana Islands in Political Union with 
the United States of America (the Covenant) provides that certain laws 
of the United States will apply to the CNMI. The laws include, under 
section 502(a)(1) of the Covenant, section 228 of title II of the 
Social Security Act (the Act), and title XVI of the Act. The laws also 
include ``those laws'' not specifically described in section 502(a)(1) 
``which are applicable to Guam and which are of general application to 
the several States.'' Under section 502(a)(2) of the Covenant, such 
laws apply to the CNMI ``as they are applicable to the several 
States.'' Similarly, section 606 of the Covenant applies the tax and 
benefit provisions of the United States Social Security System to the 
CNMI, as they apply to Guam. Guam is considered part of the United 
States for purposes of title II of the Social Security Act. See 42 
U.S.C. 410(i).
    While we previously revised our regulations to reflect that the 
CNMI is considered to be a part of the United States for purposes of 
the transitional insured provision for special age-72 benefits in 
section 228 of the Act (see 20 CFR 404.381) and for purposes of the SSI 
program (see 20 CFR 416.215), we have never previously revised our 
regulations dealing with entitlement to retirement, survivors, and 
disability insurance benefits under title II to reflect the treatment 
of the CNMI under the Covenant. We are, therefore, revising the 
following sections of our regulations to reflect the extension of the 
title II program to the CNMI.

[[Page 51554]]

Section 404.2

    We are revising paragraphs (c)(5) and (c)(6) of section 404.2 of 
our regulations to include the CNMI in our definition of both ``State'' 
and the ``United States,'' for purposes of administering title II of 
the Social Security Act. This reflects the full application of title II 
of the Social Security Act to the CNMI beginning January 1, 1987. See 
Presidential Proclamation No. 5564 (51 FR 40399 (Nov. 3, 1986)); see 
also Presidential Proclamation No. 4534 (42 FR 56593 (Oct. 27, 1977)).

Section 404.460(a)(1)

    Section 404.460(a)(1) of our regulations describes the scope of the 
alien nonpayment provision of the Act, which limits the payment of 
Social Security benefits to aliens outside the United States. We are 
revising the definition of ``outside the United States'' in this 
section to reflect that we consider the CNMI to be a part of the United 
States for purposes of this section. This change is necessary to 
reflect that we will not apply the alien nonpayment provision to aliens 
residing in the CNMI, just as it is not applied to aliens residing in 
Guam.

Section 404.1004

    Section 404.1004 of our regulations describes what work is covered 
as employment and defines ``State'' and ``United States'' under title 
II of the Social Security Act (the Act). Since, under the Covenant, we 
treat work in the CNMI the same as we treat work in Guam, we are 
revising paragraphs (b)(4), (b)(8) and (b)(9) of this section to 
include the CNMI in the definition of ``State'' and ``United States'' 
for title II purposes of the Act.

Section 404.1020

    Section 404.1020 of our regulations describes the coverage of work 
for States and their political subdivisions and instrumentalities. 
Since, under the Covenant, we treat work in the CNMI the same as we 
treat work in Guam, we are revising Sec.  404.1020(a)(3) of our 
regulations to include a reference to the CNMI directly after the 
reference to Guam.

Section 404.1022

    Section 404.1022 of our regulations describes the coverage of 
employment for workers in American Samoa or Guam. Since, under the 
Covenant, we treat work in the CNMI the same as we treat work in Guam, 
we are revising paragraphs (a) and (c) of this section to reflect that 
work performed for a private employer in the CNMI is covered employment 
and that work performed for the government of the CNMI is generally 
excluded from covered employment.

Section 404.1093

    Section 404.1093 of our regulations provides that, in using the 
exclusions from gross income provided under section 931 of the Internal 
Revenue Code (the Code), 26 U.S.C. 931, (relating to income from 
sources within possessions of the United States) and section 932 of the 
Code, 26 U.S.C. 932, (regarding coordination of U.S. and Virgin Islands 
taxes) for purposes of figuring your net earnings from self-employment, 
the term ``possession of the United States,'' as used in our 
regulations at 20 CFR 404.1081(a)(4)(iv), does not include the Virgin 
Islands, Guam or American Samoa. In describing areas affected by its 
exclusion from gross income, section 931(c) of the Code, 26 U.S.C. 
931(c), defines the term ``specified possession'' as Guam, American 
Samoa and the CNMI. Therefore, we are revising Sec.  404.1093 to 
include the CNMI.

Section 404.1096

    Section 404.1096(d) of our regulations provides that a nonresident 
alien has self-employment income only if coverage is provided under a 
totalization agreement, but explains that residents of the Commonwealth 
of Puerto Rico, the Virgin Islands, Guam or American Samoa, are not 
considered to be nonresident aliens. Therefore, we are revising this 
section to reflect that residents of the CNMI are not considered to be 
nonresident aliens.

Section 404.1200

    Section 404.1200 describes coverage for State and local government 
employees under section 218 of the Act. Mandatory Social Security and 
Medicare coverage is extended to certain services performed after July 
1, 1991, by individuals who are employees of a State (other than the 
District of Columbia, Guam, or American Samoa). Since the CNMI is 
treated like Guam under the terms of the Covenant, we are revising 
paragraph (b) of this section to add the Commonwealth of the Northern 
Mariana Islands after Guam.

Section 404.1202

    Under title II of the Act, section 210(h) defines the term 
``State'' to include ``the District of Columbia, the Commonwealth of 
Puerto Rico, the Virgin Islands, Guam and American Samoa.'' Section 
218(b)(1) of the Act refines the preceding definition solely for 
purposes of section 218, which concerns voluntary agreements for 
coverage of State and local employees, by eliminating the District of 
Columbia, Guam, and American Samoa. The definition of the term 
``State'' in Sec.  404.1202(b) is based on the definition in section 
218 of the Act. Since the CNMI is treated like Guam under the terms of 
the Covenant, we are revising Sec.  404.1202(b) to reflect that the 
CNMI is not considered a State under section 218. Under the 
requirements of the Covenant, it will be treated as a State for various 
other purposes under title II, much like the entities listed in section 
210(h) of the Act.

B. Coverage of Ministers, Members of Religious Orders, and Christian 
Science Practitioners

    Section 1402(e) of the Code, 26 U.S.C. 1402(e), allows a duly 
ordained, commissioned, or licensed minister, a member of a religious 
order, or a Christian Science practitioner, to file, under the terms of 
that section, for an exemption from payment of SECA (Self-Employment 
Contributions Act) taxes. Section 1402(e) also provides that an 
exemption received pursuant to section 1402(e) is irrevocable. However, 
section 403 of the Ticket to Work and Work Incentives Improvement Act 
of 1999 (Public Law 106-170) amended the Code to permit individuals who 
previously opted for the exemption under section 1402(e)(1), a window 
of time in which to revoke the exemption. Once the exemption is 
revoked, the individual may not file any further applications for 
exemption under section 1402(e)(1). This provision is effective for 
services performed in taxable years beginning January 1, 2000. 
Depending on the date of the individual's election, the provisions of 
this law apply to services performed in either the individual's first 
or second taxable year beginning after December 31, 1999, and for all 
succeeding taxable years. The application for revocation of the 
exemption from coverage must be filed with the Internal Revenue Service 
(usually as part of the tax return) no later than the due date of the 
Federal Income Tax Return (including extensions) for the applicant's 
second taxable year beginning after December 31, 1999.
    Congress has permitted revocations of the exemption twice in the 
past. The Social Security Amendments of 1977 (section 316 of Public Law 
95-216) and the Tax Reform Act of 1986 (section 1704 of Public Law 99-
514) each contained a provision for revocation within certain time 
periods. Section 404.1071(a) (Ministers and Members of a Religious 
Order) reflects the revocation period allowed in 1986. We

[[Page 51555]]

are revising Sec.  404.1071(a) to reflect the revocation period allowed 
in 1977 and the most recent period of revocation offered by section 403 
of the Ticket to Work and Work Incentives Improvement Act of 1999.

Public Comments

    On April 7, 2004, we published proposed rules in the Federal 
Register at 69 FR 18310 and provided a 60-day period for interested 
parties to comment. We received no comments. We are, therefore, 
publishing these rules unchanged, except for minor technical 
corrections in accordance with the descriptions in the preamble to 
these rules.

Regulatory Procedures

Executive Order 12866, as Amended by Executive Order 13258

    We have consulted with the Office of Management and Budget (OMB) 
and determined that these final rules do not meet the criteria for a 
significant regulatory action under Executive Order 12866, as amended 
by Executive Order 13258. Thus, they were not subject to OMB review.

Regulatory Flexibility Act

    We certify that these final rules will not have a significant 
economic impact on a substantial number of small entities, as they 
affect only individuals. Therefore, a regulatory flexibility analysis 
as provided in the Regulatory Flexibility Act, as amended, is not 
required.

Paperwork Reduction Act

    These final rules impose no new reporting or record keeping 
requirements subject to clearance by OMB.

(Catalog of Federal Domestic Assistance Program Nos. 96.001, Social 
Security-Disability Insurance; 96.002, Social Security-Retirement 
Insurance; 96.004, Social Security-Survivors Insurance)

List of Subjects in 20 CFR Part 404

    Administrative practice and procedure, Blind, Disability benefits, 
Old-Age, Survivors and Disability Insurance, Reporting and 
recordkeeping requirements, Social Security.

    Dated: August 2, 2004.
Jo Anne B. Barnhart,
Commissioner of Social Security.


0
For the reasons set forth in the preamble, we are amending subparts A, 
E, K and M of part 404 of title 20 of the Code of Federal Regulations 
as set forth below.

PART 404--FEDERAL OLD-AGE, SURVIVORS AND DISABILITY INSURANCE 
(1950- )

Subpart A--[Amended]

0
1. The authority citation for subpart A of part 404 is revised to read 
as follows:

    Authority: Secs. 203, 205(a), 216(j), and 702(a)(5) of the 
Social Security Act (42 U.S.C. 403, 405(a), 416(j), and 902(a)(5)) 
and 48 U.S.C. 1801.


0
2. Section 404.2 is amended by revising paragraphs (c)(5) and (6) to 
read as follows:


Sec.  404.2  General definitions and use of terms.

* * * * *
    (c) Miscellaneous. * * *
    (5) State, unless otherwise indicated, includes:
    (i) The District of Columbia,
    (ii) The Virgin Islands,
    (iii) The Commonwealth of Puerto Rico effective January 1, 1951,
    (iv) Guam and American Samoa, effective September 13, 1960, 
generally, and for purposes of sections 210(a) and 211 of the Act 
effective after 1960 with respect to service performed after 1960, and 
effective for taxable years beginning after 1960 with respect to 
crediting net earnings from self-employment and self-employment income,
    (v) The Territories of Alaska and Hawaii prior to January 3, 1959, 
and August 21, 1959, respectively, when those territories acquired 
statehood, and
    (vi) The Commonwealth of the Northern Mariana Islands effective 
January 1, 1987; Social Security coverage for affected employees of the 
government of the CNMI is also effective on January 1, 1987, under 
section 210(a)(7)(E) of the Social Security Act.
    (6) United States, when used in a geographical sense, includes, 
unless otherwise indicated:
    (i) The States,
    (ii) The Territories of Alaska and Hawaii prior to January 3, 1959, 
and August 21, 1959, respectively, when they acquired statehood,
    (iii) The District of Columbia,
    (iv) The Virgin Islands,
    (v) The Commonwealth of Puerto Rico effective January 1, 1951, (vi) 
Guam and American Samoa, effective September 13, 1960, generally, and 
for purposes of sections 210(a) and 211 of the Act, effective after 
1960 with respect to service performed after 1960, and effective for 
taxable years beginning after 1960 with respect to crediting net 
earnings from self-employment and self-employment income, and
    (vii) The Commonwealth of the Northern Mariana Islands effective 
January 1, 1987.
* * * * *

Subpart E--[Amended]

0
3. The authority citation for subpart E of part 404 is revised to read 
as follows:

    Authority: Secs. 202, 203, 204(a) and (e), 205(a) and (c), 
216(1), 223(e), 224, 225, 702(a)(5), and 1129A of the Social 
Security Act (42 U.S.C. 402, 403, 404(a) and (e), 405(a) and (c), 
416(1), 423(e), 424a, 425, 902(a)(5) and 1320a-8a) and 48 U.S.C. 
1801.

0
4. Section 404.460 is amended by revising paragraph (a)(1) to read as 
follows:


Sec.  404.460  Nonpayment of monthly benefits of aliens outside the 
United States.

    (a) * * *
    (1) For nonpayment of benefits under this section, it is necessary 
that the beneficiary be an alien, and while an alien, be outside the 
United States for more than six full consecutive calendar months. In 
determining whether, at the time of a beneficiary's initial entitlement 
to benefits, he or she has been outside the United States for a period 
exceeding six full consecutive calendar months, not more than the six 
calendar months immediately preceding the month of initial entitlement 
may be considered. For the purposes of this section, outside the United 
States means outside the territorial boundaries of the 50 States, the 
District of Columbia, Puerto Rico, the Virgin Islands of the United 
States, Guam, American Samoa, and the Commonwealth of the Northern 
Mariana Islands.
* * * * *

Subpart K--[Amended]

0
5. The authority citation for subpart K of part 404 is revised to read 
as follows:

    Authority: Secs. 202(v), 205(a), 209, 210, 211, 229(a), 230, 
231, and 702(a)(5) of the Social Security Act (42 U.S.C. 402(v), 
405(a), 409, 410, 411, 429(a), 430, 431, 902(a)(5)) and 48 U.S.C. 
1801.

0
6. Section 404.1004 is amended by revising the section heading and 
paragraphs (b)(4), (b)(8) and (b)(9) to read as follows:


Sec.  404.1004  What work is covered as employment?

* * * * *
    (b) * * *
    (4) Citizen of the United States includes a citizen of the 
Commonwealth of Puerto Rico, the Virgin Islands, Guam, American Samoa 
or the Commonwealth of the Northern Mariana Islands.
* * * * *

[[Page 51556]]

    (8) State refers to the 50 States, the District of Columbia, the 
Commonwealth of Puerto Rico, the Virgin Islands, Guam, American Samoa, 
and the Commonwealth of the Northern Mariana Islands.
    (9) United States when used in a geographical sense means the 50 
States, the District of Columbia, the Commonwealth of Puerto Rico, the 
Virgin Islands, Guam, American Samoa, and the Commonwealth of the 
Northern Mariana Islands.


Sec. 404.1020  [Amended]

0
7. In section 404.1020, paragraph (a)(3) is amended by adding ``the 
Commonwealth of the Northern Mariana Islands,'' after ``Guam,''.

0
8. Section 404.1022 is amended by revising the section heading, and 
paragraphs (a) and (c) to read as follows:


Sec.  404.1022  American Samoa, Guam, or the Commonwealth of the 
Northern Mariana Islands.

    (a) Work in American Samoa, Guam, or the Commonwealth of the 
Northern Mariana Islands. Work in American Samoa, Guam, or the 
Commonwealth of the Northern Mariana Islands for a private employer is 
covered as employment the same as in the 50 States. Work done by a 
resident of the Republic of the Philippines working in Guam on a 
temporary basis as a nonimmigrant alien admitted to Guam under section 
101(a)(15)(H)(ii) of the Immigration and Nationality Act is excluded 
from coverage regardless of the employer.
* * * * *
    (c) Work for Guam, the Commonwealth of the Northern Mariana 
Islands, or a political subdivision or wholly owned instrumentality of 
Guam or the Commonwealth of the Northern Mariana Islands. Work as an 
officer or employee (including a member of the legislature) of the 
government of Guam, or the Commonwealth of the Northern Mariana 
Islands, their political subdivisions, or any wholly owned 
instrumentality of any one or more of these, is excluded from coverage 
as employment. However, the exclusion does not apply to employees 
classified as temporary or intermittent unless the work--
    (1) Covered by a retirement system established by a law of Guam or 
the Commonwealth of the Northern Mariana Islands;
    (2) Done by an elected official;
    (3) Done by a member of the legislature; or
    (4) Done in a hospital or penal institution by a patient or inmate 
of the hospital or penal institution.
* * * * *

0
9. Section 404.1071 is amended by revising paragraph (a) to read as 
follows:


Sec.  404.1071  Ministers and members of religious orders.

    (a) If you are a duly ordained, commissioned, or licensed minister 
of a church, or a member of a religious order who has not taken a vow 
of poverty, the services you perform in the exercise of your ministry 
or in the exercise of duties required by the order (Sec.  404.1023(c) 
and (e)) are a trade or business unless you filed for and were granted 
an exemption from coverage under section 1402(e) of the Code, and you 
did not revoke such exemption in accordance with the Social Security 
Amendments of 1977, section 1704(b) of the Tax Reform Act of 1986, or 
section 403 of the Ticket to Work and Work Incentives Improvement Act 
of 1999. An exemption cannot be granted if you filed a valid waiver 
certificate under the provisions of section 1402(e) that apply to 
taxable years ending before 1968.
* * * * *


Sec.  404.1093  [Amended]

0
10. Section 404.1093 is amended by adding ``the Commonwealth of the 
Northern Mariana Islands,'' after ``Guam,''.


Sec.  404.1096  [Amended]

0
11. Section 404.1096 is amended in paragraph (d) by adding ``, the 
Commonwealth of the Northern Mariana Islands,'' after ``Guam''.

Subpart M--[Amended]

0
12. The authority citation for subpart M of part 404 is revised to read 
as follows:

    Authority: Secs. 205, 210, 218, and 702(a)(5) of the Social 
Security Act (42 U.S.C. 405, 410, 418, and 902(a)(5)); sec. 12110, 
Pub. L. 99-272, 100 Stat. 287 (42 U.S.C. 418 note); sec. 9002, Pub. 
L. 99-509, 100 Stat. 1970.


Sec.  404.1200  [Amended]

0
13. Section 404.1200 is amended in paragraph (b) by adding ``the 
Commonwealth of the Northern Mariana Islands,'' after ``Guam,''.


Sec.  404.1202  [Amended]

0
14. In section 404.1202(b), the definition of ``State'' is amended by 
adding ``, the Commonwealth of the Northern Mariana Islands,'' after 
``Guam''.

[FR Doc. 04-19118 Filed 8-19-04; 8:45 am]
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