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Case: National Religious Broadcasters, et al. v. Billy Long (i.e., the IRS Commissioner)

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Court: U.S. District Court for the Eastern District of Texas

The “Johnson Amendment” is getting a lot of attention lately.

What is it? The “Johnson Amendment” is part of a sentence in the Internal Revenue Code governing tax-exempt organizations. It’s been there for about 70 years. Lyndon Baines Johnson offered that specific text when he was serving as a Senator.

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and which does not participate in, or intervene in (including the publishing or distributing of statements), any political campaign on behalf of (or in opposition to) any candidate for public office

What happens if a nonprofit violates the Johnson Amendment? Risks loss of tax-exempt status.

70 year-old statute. Why all the attention now? Last week, parties to a lawsuit in a federal district court in the Eastern District of Texas filed a <a href="https://www.michaelbest.com/portalresource/Joint_Motion" target="_blank" rel="noopener">joint</a> motion asking the court to settle. On one side – two churches and a religious broadcaster, on the other side – the IRS.

The big deal - the IRS’s position in that joint motion. Essentially, the IRS’s current position is that the First Amendment’s Establishment Clause prevents the Johnson Amendment from reaching certain core religious speech. The joint motion states, in part:

the Johnson Amendment does not reach speech by a house of worship to its congregation, in connection with religious services through its customary channels of communication on matters of faith, concerning electoral politics viewed through the lens of religious faith

Context is important. This is a motion, not a ruling. This motion is in federal district court – which is a trial level court. Not an appellate court. Not the US Supreme Court. A ruling would be the position of only a district court in the Eastern District of Texas. It would have some level of persuasive authority, but not binding on other courts.

Law Has Not Changed. Importantly, this case hasn’t changed the statute, and doesn’t purport to. Also, if these parties get their requested consent order, both parties get what they asked for – making an appeal to a higher court unlikely.

IRS Position on Scope and Priority. The key take-away here is that the IRS clarified its position that a certain narrow category of speech is outside the scope of the Johnson Amendment. That’s the “big deal”.

How narrow is the lane that the IRS is carving out here? I.e., what “boxes” must be checked for the IRS to designate political/campaign speech as outside the Johnson Amendment scope?

Organization. “House of worship”

Posture. “Good faith”

Audience. “Congregation”

Method. “Customary channels of communication…bona fide communications internal to a house of worship”

Topic. “Matters of faith… electoral politics viewed through the lens of religious faith…moral or political issues from a religious perspective”

Context. “Connection with religious services”

Essentially, this motion outlines in writing the scope and priority that the IRS currently takes regarding the Johnson Amendment statutory language. For more detail see paragraphs 7-10 of the motion, available <a href="https://www.michaelbest.com/portalresource/Joint_Motion" target="_blank" rel="noopener">here</a>.

Practically, what does this mean? Anecdotally, enforcement in this area is pretty lax. The IRS doesn’t really make a public practice of sitting in church services looking for violations. But, not enforcing a rule in certain circumstances is much different than stating it won’t be enforced in those circumstances.

Potential Gotchas. Houses of worship should check their articles (or church constitution) and bylaws. Most likely those governing documents incorporate or state outright Johnson Amendment language. Even if the regulator (the IRS) publicly stated it thinks certain speech is outside the law, most likely your organization has separately committed to uphold the Johnson Amendment standard through its governing documents. Taking a different approach would require an amendment process – necessitating (in most cases) congregational votes or ecclesiastical approvals.

Even if you can, should you? Congress makes the tax laws. The IRS enforces the tax laws. The 70-year old statute hasn’t changed. So, even if we read this motion to be the IRS’s announcement that it won’t enforce the Johnson Amendment in certain narrow circumstances, the underlying law hasn’t changed. Many church leaders are considering whether a lower likelihood of getting “caught” violating this statute means they should engage in political campaigns.

Questions are already starting:

What is a customary channel of communication?

Does it matter if the candidate is a member of the congregation?

Can we re-print a sermon on [highly charged political topic] in the newspaper?

How does the IRS decide whether the issue is a “matter of faith”? Is that an Establishment Clause issue?

Is a sermon on our Youtube channel a “bona fide internal communication”?

Also, expect challenges and clunky application of this new position. We’ll keep you updated.

Close-up of U.S. tax documents, including W‑2 and 1099‑G forms, stacked together.

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IRS Position in Johnson Amendment Case Leaves More Questions Than Answers

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