Johnson Amendment Lawsuit Dismissed—What Churches Need to Know Now

The Johnson Amendment—the controversial Internal Revenue Code (IRC) provision prohibiting most political activities by churches and other tax-exempt organizations—remains alive, despite a highly publicized lawsuit seeking to undo it. 

A federal judge in Texas dismissed the case “without prejudice” on jurisdictional grounds, leaving the door open for a future challenge to the law against the Internal Revenue Service (IRS), the agency responsible for enforcing it.

The four plaintiffs, which included the National Religious Broadcasters and two churches, plan to appeal.

For the time being, the outcome means churches and other tax-exempt organizations are bound to the limitations found under section 501(c)(3) of the IRC: 

The court considered a proposed settlement between the IRS and the four plaintiffs. The settlement included a statement from the IRS suggesting houses of worship should enjoy greater latitude when it comes to supporting or opposing political candidates for elected office. 

The development triggered numerous filings from outside groups supporting and opposing the settlement, and an unsuccessful attempt to intervene in the case by Americans United for Separation of Church and State. 

Had the court approved the settlement, the IRS statement would have become binding only in the US District Court for the Eastern District of Texas, Tyler Division. 

However, it could have helped guide other courts handling similar cases nationwide—and the IRS was already prioritizing revisions to its guidance on the topic in anticipation of an approved settlement. 

The Johnson Amendment became part of IRC section 501(c)(3) in 1954. 

The plaintiffs argued the amendment violated their free speech and Free Exercise rights under the First Amendment of the Constitution. They also argued it violates constitutionally granted rights of due process and equal protection, and rights protected under the federal Religious Freedom Restoration Act (RFRA). 

However, the presiding judge determined “plaintiffs’ claims are ‘in respect to’ taxes and seek to restrain the threat of tax collection or assessment based on certain activity.”

Two federal tax laws—the Tax Anti-Injunction Act (AIA) and the Declaratory Judgment Act (DJA)—thus barred the court’s jurisdiction over the case, the judge said. 

The pending appeal by the plaintiffs will require time.

Future challenges to the Johnson Amendment also can be brought if other facts and circumstances exist, the judge noted. 

If a church engaged in political activities and was taxed by the IRS, a refund lawsuit could be filed, the judge said. 

Additionally, an exception to the DJA allows declaratory lawsuits in one of three courts based in Washington, D.C. An IRS revocation of a church’s tax-exempt status, for instance, would create “a specific set of facts” for such a lawsuit.  

For now, the ruling means the same guidance for churches and ministers regarding political activities remains in place. 

Churches and ministers enjoy First Amendment protections regarding publicly supporting or opposing political candidates for office and advocating on legislative matters and ballot measures. 

However, those activities may draw IRS attention, thus jeopardizing a church’s tax-exempt status. 

With respect to political candidates, the prohibition is absolute, although the IRS has not widely enforced it. 

With respect to lobbying and advocacy, a limited amount of activity is permitted. 

Separately, but relatedly, ministers still remain protected by the First Amendment to speak and preach on matters of social, biblical, and moral importance without fear of government intervention. Chapter 12 of Church Law & Tax’s online Church & Clergy Tax Guide provides more details and specific guidance regarding churches and political activities.