Unleashing the Churches!
During his presidential campaign Donald Trump reported that evangelical preachers had told him that the Johnson Amendment prevented them from endorsing him from the pulpit, so he promised to take steps to repeal it. In a speech to evangelical leaders Trump said, “If you like somebody or want somebody to represent you, you should have the right to do it.” Once elected, at the National Prayer Breakfast on February 2, 2017, Trump promised to “totally destroy” it. A so-called Religious Liberty executive order issued in May left the Johnson Amendment largely intact.
In recent years the Johnson Amendment has come under fire from religious groups and political candidates who claim it stifles the free speech rights of clergy to directly opine about candidates from the pulpit.
The Johnson Amendment is an Internal Revenue Service (IRS) rule that prohibits nonprofit organizations from endorsing or campaigning against political candidates. It was introduced by its namesake, then-freshman United States Senator Lyndon Baines Johnson, in 1954 after he faced intense opposition from conservative nonprofit organizations. Congress passed it without debate, and it was added to the current version of the IRS Code in 1986.
Although it is not necessary for churches to apply for 501(c)(3) status to receive tax-deductible donations, it serves as a certification that the organization has met the requirements for a tax-exempt organization. Without it, the burden of proof shifts to donors to prove that the church has met the requirements of tax-exempt status in order to claim the tax deduction. Regardless of whether a church has applied for an exemption or not, the Johnson Amendment still applies to the church.
Although a 501(c)(3) organization that endorses political candidates could face IRS penalties ranging from being required to pay an excise tax on political expenditures to revocation of tax-exempt status, IRS enforcement actions are extremely rare. Given the lack of direct enforcement, the courts have not directly ruled on the issue of what pastors may or may not say from the pulpit during the election cycle.
In an effort to provoke IRS enforcement actions and force the matter to court, some members of the clergy have participated in “Pulpit Freedom Sunday,” an initiative begun by the Alliance Defending Freedom in 2008. On a specified Sunday each year, participating preachers give strong political sermons and send recordings of those sermons to the IRS. If the IRS took the bait and began an enforcement action, the churches would gain standing to attack the Johnson Amendment in federal court. So far, the IRS has ignored the initiative, much to the frustration of the participating clergy.*
The tax-exempt status of churches and other charities predates the U.S. tax code by several centuries, tracing back to the Charitable Uses Act passed by the British Parliament in 1601. The preamble to the act indicates that the government wanted to encourage private contributions to organizations that conducted certain activities that the government believed were beneficial to society.
The desire to encourage private contributions to public interest organizations carried over to the United States in the original 1913 income tax law; American lawmakers exempted “any corporation or association organized and operated exclusively for religious, charitable, scientific, or educational purposes, no part of the net income of which inures to the benefit of any private shareholder or individual.”
Against nearly 400 years of tax-exempt status, the prohibition against political endorsements in 1954 is a relatively recent development.
Examples of IRS enforcement remain rare. In 2000 a federal court affirmed an IRS decision revoking the tax-exempt status of an upstate New York church that had published full-page newspaper advertisements in 1992 encouraging Christians not to vote for presidential candidate Bill Clinton (Branch Ministries v. Rossotti, 2000). The court found that the church had violated the law when it bought the advertisement for the purpose of opposing a candidate, attributed the advertisement to the church, and solicited tax-deductible donations for the cost.
After the enforcement action, the church reorganized and continued nonprofit operations under another name.
In 2009 the IRS dropped a case it had brought against Catholic Answers, a nonprofit apologetics organization, after investigating whether the organization’s president had violated the Johnson Amendment when he had written that presidential candidate John Kerry should not receive Communion because of his support for legal abortion.
Also in 2009 a federal judge blocked an IRS investigation of a church because the IRS had not followed the Church Audit Procedures Act of 1984, which required the IRS summons to be authorized by a regional IRS commissioner or higher. It turned out that the IRS had eliminated the regional commissioner position, and, according to the court, the statute superseded the IRS operating procedures, rendering the IRS position a legal impossibility.
The lack of enforcement could be due to nonprofits scrupulously following the rules or the difficulty and immense unpopularity of enforcement. In a practical sense, the amendment preserves the notion that houses of worship can establish a sanctuary from the divisive political speech that characterizes social media that parishioners engage in during the rest of the week. At the same time, churches are welcome to address all kinds of issues that may lead to an intersection with legislative action. This keeps the focus on the issues while avoiding the pitfalls and pain of ad hominem attacks on individual candidates and their supporters.
Is the Johnson Amendment Constitutional?
Although referred to as an “amendment,” the Johnson Amendment is not ensconced in the First Amendment—it is a statutory provision that could be overturned by Congress or ignored by the executive branch.
While it is tempting to assert a “free exercise” right to religious speech, or a general freedom of speech argument, churches have the same limitations as all other 501(c)(3) nonprofit charities. The fact that 501(c)(3) is so broad, to the point where churches and entities such as hospitals are under the same category, creates an interesting issue. The purpose of the code is to encourage private donations to socially beneficial organizations and in many ways to perform privately the same types of activities that the government might otherwise perform.
For instance, a nonprofit hospital and a state-run hospital might provide nearly identical services. Yet the state is prohibited by the establishment clause from proselytizing, which is the primary purpose of most churches.
If the IRS did take an enforcement action against a church, challenging its tax-exempt status, the church would likely assert that political endorsement was part of its free exercise of religion. The IRS would counter that the free exercise clause would not protect the church under Employment Division v. Smith (1990), because the Johnson Amendment is not intended to disadvantage a religious group and is equally applied across all nonprofits.
Some might then argue that tax-exempt status is tantamount to a government subsidy and that, as such, the government can control the content of the speech of the organization. However, the establishment clause, through a vast trove of Supreme Court precedent, prohibits the state from paying for the religious mission of churches. The argument that the tax-exempt status represents state funding also fails in states that have passed Blaine Amendments, which bar religious institutions from receiving money from a state government.
Given these discrepancies between secular and religious nonprofits, it could be possible that houses of worship will ultimately be found to not fit within the existing 501(c)(3) rubric. In fact, they may properly occupy a separate tax-exempt category altogether. In Citizens United v. FEC (2010) the U.S. Supreme Court found that a law that prevented corporations and labor unions from using their money to electioneer violated the First Amendment’s protection of freedom of speech.
Citizens United, a conservative 501(c)(4) corporation, made a film, Hillary: The Movie, which was critical of then-Senator Hillary Clinton. Citizens United sought injunctive relief against the Federal Election Commission’s application of the Bipartisan Campaign Reform Act (BCRA). The BCRA prevented corporations or labor unions from funding “electioneering communications” from their treasuries and required the disclosure of donors to the communications and a disclaimer that the communication was not authorized by the candidate it intended to support.
In a 5–4 decision authorized by Justice Anthony Kennedy, the Supreme Court found that Citizens United, as a corporation, had free speech rights that were infringed upon by the BCRA. This decision foreshadowed the later finding in Hobby Lobby that corporations also have the right to free exercise of religion.
At the same time, the Court upheld the disclosure requirements and the ban on direct contributions to candidates from corporations and unions.
If a religious organization ever successfully chased an IRS enforcement action to the Supreme Court, the Court could apply the reasoning in Citizens United and Hobby Lobby to find that the Johnson Amendment unconstitutionally infringes on rights to free speech and the free exercise of religion. As to the issue of disclosure of donors for political purposes, the Court might find that, as with 501(c)(4) organizations, donors can remain anonymous. Similarly, the Court might conclude that direct contributions to political donors remain prohibited.
There is a very real fear that otherwise-nondeductible political campaign donations could be funneled through nonprofit organizations and that this could increase the power of candidates who could secure the endorsement of the major local congregations and larger amounts of tax-deductible donations while placing their opponents at a substantial disadvantage.
Congress is currently considering legislation to modify the Johnson Amendment. In the House, Representative Steve Scalise introduced a bill that would permit all 501(c)(3) organizations to endorse candidates provided that any associated spending is minimal. H.R. 781, dubbed the “Free Speech Fairness Act,” would add a “special rule” preventing nonprofits from being “deemed to have participated in, or intervened in, any political campaign” because of “any statement” that “(a) is made in the ordinary course of the organization’s regular and customary activities in carrying out its exempt purpose, and (b) results in the organization incurring not more than de minimis incremental expenses.”
In application, this could mean that an endorsement from the pulpit during election season would not be considered a violation of the still-existent Johnson Amendment. However, if a church took the extraordinary step of holding a massive campaign rally, it would not likely constitute a “regular and customary activity.”
This might satisfy religious nonprofits that want to endorse candidates, but it does not resolve the problem of tax-deductible donations being used for campaign purposes. Although corporations now enjoy nearly all of the rights of individual citizens, and it is entirely foreseeable that these corporate rights are extended to nonprofits, individuals still cannot deduct campaign donations.
The solution in the future might be for them to seek to be placed under an entirely new category that makes political endorsements taxable but exempts the majority of their work as nontaxable. Churches would probably need to predesignate how much of their work is political in nature as not tax-deductible, and the enforcement would be focused on whether they exceed the allotted amount of political speech.
This would follow some of the features of 501(c)(4) organizations, although the primary mission of the organizations would be religious rather than political. In contrast with 501(c)(3) organizations, 501(c)(4) organizations can engage in political campaigns and elections, so long as their primary activity is the promotion of social welfare and is related to the organization’s purpose. Although donations generally could be considered tax-deductible, that portion spent on political activities and advocacy for particular candidates would be taxable.
This is not a perfect solution by any means, but it would avoid the charge that otherwise taxable campaign donations could be funneled into churches.
Although there may be a legally cognizable way for churches to get into the business of endorsing candidates, it could happen at tremendous cost. Churches that decide to introduce religious power to the world of politics could begin to pressure congregants to vote for or against particular candidates. Large churches could bankroll entire political campaigns and might expect favorable treatment in return. Churches could host campaign events, and members of the clergy could make religious claims that support their preferred candidates. As dissenting parishioners filter out, churches soon could be regarded as significant and desirable voting blocs.
Despite some loud exceptions, most houses of worship have regarded the Johnson Amendment as a welcome hedge, which has prevented clergy from seeing their congregations divided along political lines and allow them to focus on their religious mission.
Article Author: Michael D. Peabody
Michael D. Peabody is an attorney in Los Angeles, California. He has practiced in the fields of workers compensation and employment law, including workplace discrimination and wrongful termination. He is a frequent contributor to Liberty magazine and editsReligiousLiberty.TV, an independent website dedicated to celebrating liberty of conscience. Mr. Peabody is a favorite guest on Liberty’s weekly radio show, “Lifequest Liberty.”