Targeting LBJ's Revenge

Targeting LBJ’s Revenge

What Is The Johnson Amendment?

The Johnson Amendment was passed in 1954 by a Republican Congress and signed into law by President Eisenhower. It was offered by then-Senator Lyndon B. Johnson, a Democrat from Texas, who was motivated by a nonprofit, nonreligious entity that had endorsed his Republican rival in a recent election. It was introduced on the floor as an amendment to a revision to section 501(c)(3) of the Internal Revenue Code, and consequently there is functionally no legislative history suggesting what Senator Johnson or his colleagues thought was included in, or excluded from, the term “political activity.”

Most churches in the U.S. are now 501(c)(3) entities. The language was amended again in 1987, to include not only activities on behalf of a particular candidate but to also include activities in opposition to a particular candidate. Today, it is part of section 501(c)(3) of the Internal Revenue Code, defining as one of twenty-nine kinds of entities which are exempt from paying Federal taxes. The applicable section of the tax law reads as follows:

Corporations, and any community chest, fund, or foundation, organized and operated exclusively for religious, charitable, scientific, testing for public safety, literary, or educational purposes, or to foster national or international amateur sports competition (but only if no part of its activities involve the provision of athletic facilities or equipment), or for the prevention of cruelty to children or animals, no part of the net earnings of which inures to the benefit of any private shareholder or individual, no substantial part of the activities of which is carrying on propaganda, or otherwise attempting, to influence legislation (except as otherwise provided in subsection (h)), and which does not participate in, or intervene in (including the publishing or distributing of statements), any political campaign on behalf of (or in opposition to) any candidate for public office(Emphasis added.)

 

How Is The Johnson Amendment Applied?

In 2006, the IRS issued FS 2006-17, which indicated that voter education such as publishing candidate voting records and platforms, voter registration drives, and get-out-the-vote drives do not count as “political activity” so long as they are done in a nonpartisan fashion. “Partisan” in this context was defined as failing to include disfavored candidates, refusing to submit voters who indicate a certain partisan preference, or misrepresenting or portraying as favorable the positions of candidates described. 501(c)(3) tax-exempt organizations may invite candidates to speak to them, but the invitations must be open to all candidates for that office.

Under FS 2006-17, a 501(c)(3) may engage in “issue advocacy,” but may not closely link its “issue advocacy” with the positions of particular candidates and is cautioned to avoid issue advocacy efforts timed to coincide with an imminent election. Some members may recall that in 2008, certain churches in California urged their members to vote in favor of California’s Proposition 8 which banned same-sex marriage; this did not violate the Johnson Amendment under FS 2006-17, because it related to the issue of same-sex marriage rather than any candidate.

I find no evidence that the Johnson Amendment has ever been directly challenged for validity under the First Amendment, under the Free Exercise or Free Speech clauses. It seems to me that substantial challenges under those clauses might be mounted and there are indications that religious-rights advocacy organizations like the Alliance Defense Fund and the ACLJ are attempting to bring exactly such a challenge right now. I’d welcome information regarding those claims, or on precedent that my cursory survey missed.

Judicial challenges to the law have instead taken the form of disputing IRS rulings and enforcement of it. The most prominent case law interpreting the Johnson Amendment is United States v. Dykema, 666 F.2d 1096 (7th Cir. 1981). In Dykema, the Seventh Circuit indicated that whether a tax-exempt entity’s activities violate the Johnson Amendment must be evaluated in light of all relevant “facts and circumstances.” Among these were the following discussed extensively by the Dykema Court, at 1100-1104 are whether the purpose of the organization exclusively for one of the purposes described within 501(c)(3), whether a substantial part of the organization’s activities consist of attempting to influence legislation, and whether the organization participates in political campaigns. For instance, in Regan v. Taxation With Representation of Washington, 461 U.S. 540 (1983) TWR was denied 501(c)(3) status because of its routine activity of lobbying for various forms of taxpayer rights. In particular the TWR Court was moved by the fact that the entity engaged in “express advocacy.” Note, though, that a standard of “express advocacy” would be substantially narrower than a standard that engages in the holistic “facts and circumstances” test described (and historically more often applied) in Dykema. See, e.g., FEC v. Christian Coalition, 52 F.Supp.2d 45, 53 (D.D.C. 1999).

The tension between these two tests was noted in Association of the Bar of the City of New York v. Commissioner, 858 F.2d 876 (2d Cir. 1988). In New York Bar, the lawyer’s association published to its members an informational newsletter that ranked candidates in order of preference based on issues selected by the leadership of the entity. This was found to constitute “political activity” under the “facts and circumstances” test, but not under the “express advocacy” test, because there was neither a formal endorsement nor a formal dis-endorsement. Ultimately, the New York Bar Court applied the broader “facts and circumstances” test from Dykema, and concluded that the New York Bar had violated the Johnson Amendment, with the penalty that the New York Bar lost its 501(c)(3) tax-exempt status. The Supreme Court has not yet issued a decision announcing which of the two standards applies, and under the case of Chevron U.S.A. Inc. v. Natural Res. Def. Council, Inc., 467 U.S. 837, 843-45 (1984), Federal courts are generally guided to defer to any reasonable interpretation of an ambiguous law that is used by the agency charged with enforcing that law absent other guidance.

 

Why Is The Johnson Amendment In Politics Now?

On January 3, 2017, Congressman Walter B. Jones of North Carolina introduced a bill, titled H.R. 172, which would strike the language “, and which does not participate in, or intervene in (including the publishing or distributing of statements), any political campaign on behalf of (or in opposition to) any candidate for public office” from section 501(c)(3) of the Internal Revenue Code. If passed, this would effectively repeal the Johnson Amendment. Rep. Jones describes the purpose of the bill as follows: “To restore the Free Speech and First Amendment rights of churches and exempt organizations by repealing the 1954 Johnson Amendment.” H.R. 172 has been referred to the House Committee on Ways and Means, which is the committee that controls tax law; the committee has yet to take action on the bill.

On February 2, 2017, President Trump attended the annual National Prayer Breakfast in Washington, DC. During his remarks, he cited “the right to worship according to our own beliefs” as a fundamental freedom of all Americans, and then said: “That is why I will get rid of and totally destroy the Johnson Amendment and allow our representatives of faith to speak freely and without fear of retribution. I will do that. Remember.”

President Trump lacks Constitutional power to unilaterally “get rid of and totally destroy” the Johnson Amendment, because it is a part of formal statutory law. Only Congress can amend statutes. What President Trump can do, unilaterally, is issue an executive order instructing the Commissioner of the Internal Revenue Service to apply the narrower “express advocacy” test during Trump’s Presidency.

We may certainly infer from the President’s remarks this past Thursday that should H.R. 172 pass out of Congress, he will sign the bill into law. Some might go further and anticipate that the President and members of his Administration will use their political influence to lobby Members of Congress in favor of passing H.R. 172.

Photo by manhhai