On May 4, President Trump kept a campaign promise when he signed an executive order directing the IRS "to exercise maximum enforcement discretion to alleviate the burden of the Johnson amendment, which prohibits religious leaders from speaking about politics and candidates from the pulpit." The Johnson amendment was passed in 1954 and prohibits Section 501(c)(3) tax-exempt charitable organizations from participating in political activities that favor or oppose a candidate for office. Violators of the amendment can have their exempt status revoked. While the law is aimed at all 501(c)(3) organizations, some churches and religious groups have argued that it limits their free speech and free exercise rights. This argument appears to be the basis of the executive order.

The order does not repeal the Johnson amendment, as it is a federal statute which cannot be repealed by executive order. Also, the order does not represent a major shift in IRS policy or enforcement. The Johnson amendment has only been used to strip a church of its exemption on one occasion, and that was in a case where one church purchased a full-page advertisement in the New York Times to oppose Bill Clinton's presidential bid (a federal appeals court later upheld the IRS decision). The primary reason that the amendment has not been heavily enforced is that its scope is rather limited. The Johnson amendment only addresses activities directly related to the support or opposition of a candidate for office. In general, the not-for-profit actions prohibited by the Johnson amendment are campaign contributions to a specific candidate, or statements that oppose or endorse a specific candidate. It does not prohibit exempt organizations from expressing opinions regarding political causes or issues.

The executive order appears to direct the IRS to stay the course, to continue the hands off policy that it implemented since the amendment was enacted. It also may set the stage for an effort to repeal the Johnson amendment entirely. Such a repeal effort could divide charitable organizations. Supporters of repeal legislation argue that the amendment unfairly targets religious beliefs and stifles religious speech.

Opponents of repeal legislation argue that a repeal would violate the separation of church and state and that the amendment prevents religious organizations and other not-for-profit entities from becoming conduits for undisclosed political contributions. And while this debate is expected to continue, it is important to remember that as long as the law remains in effect, future administrations could redirect the IRS enforcement efforts. Thus, absent legislative change or emboldened political activity by churches, the executive order should not be viewed as a sea change, but more of a confirmation of the status quo.

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Published on May 16, 2017