Court Blocks IRS Deal on Political Endorsements
A U.S. federal judge has rejected a proposed agreement involving the Internal Revenue Service that would have allowed religious organizations, including churches, to endorse political candidates without risking their tax-exempt status. The ruling marks a significant legal development in the long-running debate over the separation of church and state and the limits of political activity by nonprofit organizations.
The case stems from a legal challenge brought by two Texas churches and the National Religious Broadcasters, which sought to overturn or weaken a long-standing provision in U.S. tax law known as the Johnson Amendment. This rule prohibits tax-exempt nonprofit organizations—including religious institutions—from endorsing or opposing political candidates. Violating the amendment can result in the loss of tax-exempt status.
In an effort to resolve the lawsuit, the IRS had entered into a settlement agreement that would effectively carve out an exception for religious organizations. Under this pact, certain forms of communication between religious leaders and their congregations could be considered protected religious expression rather than political endorsement, thereby shielding these institutions from penalties under the Johnson Amendment.
However, U.S. District Judge J. Campbell Barker declined to approve the agreement. In his ruling, he stated that the court lacked jurisdiction to endorse the settlement due to the Tax Anti-Injunction Act. This law generally prevents courts from issuing rulings that would interfere with the assessment or collection of taxes.
Judge Barker explained that approving the agreement would effectively determine how the Johnson Amendment is applied, which in turn could impact how much tax the government is able to collect. Because of this, the court concluded that it could not legally sign off on the proposed deal. As a result, the settlement was rejected, leaving the Johnson Amendment fully intact for now.
The decision has been welcomed by advocacy groups such as Americans United for Separation of Church and State, which argued that the proposed pact would have undermined the longstanding barrier between religious institutions and political campaigning. Supporters of the ruling say it prevents the potential politicization of churches and preserves the integrity of nonprofit regulations.
On the other side, the National Religious Broadcasters expressed disappointment and indicated plans to appeal the ruling. They argue that the Johnson Amendment restricts free speech and religious expression, particularly in the context of sermons or internal communications within religious communities. Supporters of the challenge believe that religious leaders should have greater freedom to speak on political matters without risking financial penalties.
The case also reflects shifting political positions within the federal government. Under the administration of Joe Biden, the Department of Justice had defended the constitutionality of the Johnson Amendment. However, under Donald Trump, the government signaled support for loosening or eliminating the rule, aligning with broader efforts to expand religious liberty protections.
Legal experts note that while the ruling does not directly address the constitutionality of the Johnson Amendment, it effectively halts attempts to weaken it through settlement agreements. Instead, any significant change to the law would likely need to come through Congress or a direct constitutional challenge in higher courts.
Ultimately, the case highlights ongoing tensions between free speech, religious freedom, and campaign finance law in the United States. By rejecting the IRS pact, the court has maintained the status quo—for now—ensuring that tax-exempt religious organizations remain restricted from formally endorsing political candidates. However, with appeals expected, the issue is far from settled and could continue to evolve in future legal battles.
⚖️ Key Legal Outcomes
- A federal judge rejected an IRS settlement allowing churches to endorse political candidates.
- The court ruled it lacked jurisdiction under the Tax Anti-Injunction Act.
- The decision keeps the Johnson Amendment fully in effect.
- Religious groups involved in the case plan to appeal the ruling.
- The case avoids ruling on constitutionality but blocks the proposed IRS workaround.
❗ Why It Matters
- Preserves limits on political activity by tax-exempt organizations.
- Reinforces the separation of church and state.
- Prevents potential politicization of religious institutions.
- Signals limits on using settlements to bypass federal law.
- Sets the stage for future legal or legislative challenges.
