Historically, organizations exempt under IRC § 501(c)(3)—including churches and religious organizations—have been strictly prohibited from directly or indirectly participating in political campaigns. This restriction, commonly known as the Johnson Amendment, has been a key compliance area for decades. Violation could lead to the loss of tax-exempt status or the imposition of excise taxes on political expenditures.
Participation can include:
- Endorsing or opposing a political candidate
- Donating to a campaign
- Distributing partisan literature
- Public statements—verbal or written—on behalf of or against any candidate
However, a recent federal court development has raised questions about how the IRS will enforce these restrictions going forward—at least when it comes to churches and other faith-based organizations.
A Legal Turning Point: The NRB Consent Decree
In a case involving the National Religious Broadcasters (NRB), the IRS agreed to a Consent Decree in the U.S. District Court for the Eastern District of Texas. The decree significantly narrows the IRS’s application of the Johnson Amendment as it pertains to houses of worship.
Key highlights from the ruling:
- The IRS conceded that applying the Johnson Amendment to internal communications between a church and its congregation during religious services could create constitutional conflicts.
- The IRS acknowledged that speech from the pulpit, even if it addresses political candidates or issues, is more akin to a private family discussion than to campaign activity.
- As a result, faith-based organizations communicating through customary religious channels about electoral politics through a lens of religious faith are not considered to be participating in campaign intervention.
Implications for Churches and Religious Leaders
This reinterpretation could provide greater freedom for pastors, rabbis, and other religious leaders to speak on political issues within the context of religious services. Under the IRS’s updated view, such speech:
- Is not considered political intervention
- Does not, by itself, jeopardize tax-exempt status
- Is treated as protected speech under the First Amendment and Religious Freedom Restoration Act
That said, churches must still exercise caution. This new stance does not grant blanket immunity for political activities. The facts and circumstances test still applies, particularly for:
- Political speech outside of religious services
- Public endorsements made through media or campaign events
- Use of church resources for political purposes
Reactions and Ongoing Debate
Supporters say:
- This ruling restores First Amendment rights for religious leaders.
- It prevents the government from intruding on spiritual teachings that include political perspectives.
Critics warn:
- It risks turning churches into partisan political platforms.
- It creates unequal standards, allowing religious 501(c)(3)s more latitude than secular ones.
The ruling has stirred strong opinions—and it’s clear this isn’t the final chapter. The issue could lead to further litigation, IRS guidance, or even legislative action.
What Churches and Advisors Should Do Now
Practical Consideration:
Stay informed. While the IRS’s recent position offers more leeway, it doesn’t eliminate risk. Churches and their legal or tax advisors should:
- Document the context and purpose of political references made during services
- Avoid campaigning outside the church setting
- Refrain from financial or in-kind contributions to candidates or campaigns
- Monitor developments in IRS guidance or future court rulings
Final Thoughts
The recent NRB case represents a significant shift in how the IRS interprets political campaign intervention for churches. While it may expand what religious leaders can say within the pulpit, it doesn’t give a green light for unrestricted political activity. For now, religious organizations must walk a fine line between faith-based political commentary and campaign activity—with the law still evolving.
