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A controversial decades-old law barring many tax-exempt organizations from getting involved in politics may be in peril.
President Donald Trump renewed his pledge to eliminate what is known as the Johnson Amendment during a Feb. 2 speech at the National Prayer Breakfast. The amendment, proposed in 1954 by Sen. Lyndon B. Johnson (D-Texas), bars churches and other 501(c)(3) nonprofits from endorsing or opposing political candidates, at the risk of losing their exempt status under that tax code section.
Practitioners in the tax-exempt arena have previously warned that abandoning the Johnson Amendment could have consequences far beyond political endorsements—for example, prompting flows of political money into 501(c)(3) organizations. But more momentum behind the issue is likely now that Trump has won the White House and Republicans have held onto the House and Senate. In his remarks Feb. 2, Trump vowed to “get rid of and totally destroy” the amendment and to allow religious leaders to speak freely.
“Freedom of religion is a sacred right but it’s also a right under threat all around us and the world is under serious, serious threat in so many different ways,” Trump said.
House Speaker Paul D. Ryan (R-Wis.) said he supports getting rid of the ban during a Feb. 2 news conference.
House Majority Whip Steve Scalise (R-La.) and Rep. Jody Hice (R-Ga.) on Feb. 1 reintroduced a bill (H.R. 781) altering the amendment after first introducing it in September. Sen. James Lankford (R-Okla.), co-chair of the Congressional Prayer Caucus, introduced the Senate companion (S. 264) the same day. Both bills have been referred to their respective committees.
The bill would allow charitable organizations to make statements relating to political campaigns as long as the statements “are made in the ordinary course of carrying out its tax-exempt purpose.”
Trump’s comments help “add momentum behind this effort to restore the free speech rights of religious organizations,” Scalise told Bloomberg BNA Feb. 2. The Internal Revenue Service has used the ban to intimidate groups, he said.
“We’re going to move this aggressively through the system, hopefully get it to the president’s desk, and he’ll sign it,” Scalise said. “We’re really excited he’s going to continue to work with us.”
Hice, a Baptist pastor, said in a Feb. 2 statement that he was “heartened” by Trump’s comments at the prayer breakfast.
“I know just how important it is to ensure that our churches and nonprofit organizations are allowed the same fundamental rights as every citizen of this great Nation,” he said.
A draft executive order would bar the Treasury Department, including the IRS, from denying tax exemptions or issuing tax penalties to churches and other houses of worship because of political activity or speech. The draft order would also allow religious organizations to fire employees based on their beliefs, according to the Center for Investigative Reporting.
The White House didn’t return a request for comment on the order. White House press secretary Sean Spicer said during a Feb. 2 news conference there are no executive orders officially ready to be released when asked about the draft.
“As the president does all the time, he asks for input, he asks for ideas and on a variety of subjects,” Spicer said. “There are staffing procedures that go on where people have a thought or an idea and it goes through the process, but until the president makes up his mind and gets feedback and decides that’s final, there’s nothing to announce.”
The executive order draft in some ways is broader than any change to the Johnson Amendment, because it goes beyond qualifying for tax-exempt status, said Elizabeth J. Kingsley, an attorney at Harmon, Curran, Spielberg & Eisenberg LLP in Washington. Current tax law disallows Section 170 tax deductions for contributions marked as lobbying, even if the recipient is a charitable organization.
But the order “would prohibit the IRS from disallowing that deduction if the contribution were earmarked for lobbying speech that qualified as ‘speaking on moral or political issues from a religious perspective,’” Kingsley told Bloomberg BNA in an e-mail.
The order would “create a massive loophole for dark money” and organizations wouldn’t be required to report the source of their funds, according to a statement from Citizens for Responsibility and Ethics in Washington, a watchdog group.
“The president’s statement this morning, together with this proposed executive order, constitutes a stunning assault on free speech, and a gift to dark money groups—as long as they agree with the president,” the statement said.
With assistance from Jonathan Nicholson and Allyson Versprille in Washington
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