Judge Dismisses IRS Agreement on Political Endorsements by Churches

A federal judge recently overturned an agreement that allowed churches to support political candidates without risking their tax-exempt status. This decision has implications related to the Johnson Amendment, which prohibits such endorsements.

The U.S. Treasury Department and the IRS are now looking into providing more guidance for religious organizations about the Johnson Amendment’s application, according to reports.

Treasury Secretary Scott Bessent emphasized that “religious freedom is a cornerstone of our Constitution,” adding that open practice of faith is central to America’s identity, especially during this year, which marks the nation’s 250th anniversary. As many people celebrate Holy Week and Passover, he noted that the administration remains committed to protecting religious freedom as a basic right. The IRS will soon offer clearer guidance reflecting these values.

The prior agreement allowed for certain religious communications to be excluded from the limitations imposed by a 1954 tax law named after then-Senator Lyndon Johnson, which restricts endorsements from religious and nonprofit organizations.

Judge J. Campbell Barker, a Trump appointee, ruled that he didn’t have the authority to approve the IRS’s agreement with two Texas churches and the National Religious Broadcasting Board (NRB). His ruling didn’t address the case’s substance.

The IRS had entered this agreement in July to settle a lawsuit initiated by the NRB that challenged the Johnson Amendment ahead of the 2024 presidential election. Previously, the Justice Department under President Biden defended the Johnson Amendment’s constitutionality, but the stance shifted during Trump’s administration, pushing for its repeal.

NRB General Counsel Michael Farris mentioned plans to appeal, arguing that the judge overlooked an exemption that would allow the lawsuit to move forward.

Tony Perkins, president of the Family Research Council, criticized Barker for not seizing the chance to address what he sees as a threat to American freedoms, especially as the nation celebrates its founding anniversary. He pointed out that the judge rejected a consent decree which related to the Johnson Amendment, suggesting it restricts the free speech rights of religious organizations. Perkins expressed support for NRB’s upcoming appeal to the Fifth Circuit Court of Appeals.

While the Treasury Department and IRS don’t have a specific timeline for their new guidance, they indicated it would be available “soon.” This guidance is expected to clarify how the law impacts certain communications during religious services. The agency intends to collaborate with relevant parties to formulate this guidance, with further decisions on its release expected later this year.