A federal judge has tossed without prejudice the proposed settlement agreement between religious organizations and the Internal Revenue Service (IRS) that would have lifted in a specific case the ban on political speech in a church or other place of worship within the tax law known as the Johnson Amendment. The decision can be found here.
The Johnson Amendment is part of the federal tax code. It prohibits all 501(c)(3) nonprofits from endorsing or opposing political candidates. It is named for President Lyndon Johnson, who as a United States senator from Texas, introduced a preliminary draft of the law in July 1954.
A settlement had been reached by the National Religious Broadcasters and the IRS regarding the prohibition on religious organizations being involved in certain political acts. The National Religious Broadcasters alleged the Johnson Amendment violated the First Amendment right to freedom of speech and the free exercise of religion, the Fifth Amendment rights to due process of law and equal protection under the law, and the Religious Freedom Restoration Act.
The parties agreed in the filing that the court has the power to provide the injunction with respect to the plaintiffs’ request under the U.S. Constitution and the Judiciary Act of 1789. A key element of the argument in the amended complaint is that the amendment has been on the books since 1954 but is rarely enforced.
“The IRS generally has not enforced the Johnson Amendment against houses of worship for speech concerning electoral politics in the context of worship services,” the plaintiffs argued in a court filing.
The IRS and religious organizations led by the National Religious Broadcasters and Intercessors for America, had filed a joint motion for entry of a consent judgement asking for declaratory relief. The settlement was rejected by United States District Judge J. Campbell Barker, sitting in the United States District Court for the Eastern District of Texas.
An appeal is expected to be filed in the United States Court of Appeals for the Fifth Circuit.
The judge cited four areas with the argument and settlement did not meet constitutional muster. Judge Barker wrote that “the government cites no authority for its position that its own consent to an injunction regarding a condition for tax benefits creates jurisdiction” that the Tax Anti-Injunction Act AIA) or the Declaratory Judgment Act (DJA) otherwise denies. He also rejected cases cited in as not being on point.
Judge Barker rejected the argument in the settlement that the DJA and AIA apply because plaintiffs’ claims are “in respect to” taxes and seek to restrain the threat of tax collection or assessment based on certain activity in wrong. “The Johnson Amendment is a condition of tax-exempt status under Section 501(c)(3) and the tax deductibility of donations under Section 170(c)(2),” he wrote.
The judge’s third point was that the parties’ appeal to “a narrow, judicially created exception” to the AIA recognized by the Supreme Court of the United States in Enochs v. Williams Packing & Navigation Co., 370 U.S. 1 (1962)” only applies only if it is clear that under no circumstances could the government ultimately prevail, and equity jurisdiction otherwise exists. “The prospect of a taxpayer paying a tax that results in financial ruin not fixable by a later tax refund — the reason for this narrow, equitable exception — is thus not present.” He went further in the decision in that the “exception’s first prong is also not met. It requires that a court adopt the “most liberal view of the law and the facts” that favors the taxing authority.”
The fourth point was that the deal “provides no remedy for the chilling effect” is not valid because “they have not been subject to an adverse Section 501(c)(3) determination.” The judge cited that Congress “is the appropriate body to weigh the relevant, policy-laden considerations, such as the harshness of the present law, the consequences of an unjustified revocation of Section 501(c)(3) status, [and] the number of organizations in any year threatened with such revocation.”
The National Religious Broadcasters released a statement that the case “had been settled between the plaintiffs and the IRS pending the court’s approval of a consent decree. The decree was limited to churches and other houses of worship making statements about candidates in the context of worship services. The IRS agreed that in such settings, the Johnson Amendment does not apply, and to contend otherwise would violate the First Amendment’s Establishment of Religion Clause.”
The statement continued that the plaintiffs “believe that well-established precedent, including decisions by the Supreme Court, mandates a different outcome. These precedents set out two rules. First, the Anti-Injunction Act does not apply when there is no available alternative to challenge the constitutionality of a law or action. Second, no one has to violate the law before challenging a law that violates the First Amendment, particularly the freedom of speech.”
Nonprofit leaders applauded the decision. “Nonprofits exist to serve the common good, not partisan politics. For now, the court has kept in place a foundational protection for the nonprofit sector and the communities we serve,” Diana Yentel, president & CEO of the National Council of Nonprofits, said via a statement. “The court’s decision maintains federal protections that keep partisan political manipulation out of charitable organizations, strengthening public confidence in nonprofits at a time when their vital work in communities across the country is more needed than ever.” She continued: “Charitable nonprofits remain united in their call for Congress and the administration to continue to uphold the nonpartisan nature of the sector.”
Earlier this year, the National Council of Nonprofits, along with the American Humanist Association, Americans United for Separation of Church and State, Freedom From Religion Foundation, Independent Sector, Interfaith Alliance, Public Citizen, and others, launched a national sign-on letter urging the federal government to preserve the Johnson Amendment. More than 1,800 nonprofits signed the letter, warning that weakening this law invites partisan interests into nonprofit spaces, distorts priorities, and jeopardizes long-standing community trust.
