OUR THOUGHTS ON:

President Trump Signs Executive Order to Prevent IRS from Enforcing Sanctions on Churches for Engaging in Political Activities

Not-for-Profit|Tax

By Melanie Pantalone

In 1954, then-Senator Lyndon Johnson introduced a bill known today as the Johnson Amendment that was signed into law under 501(c)(3) of the Internal Revenue Code (IRC).  The Johnson Amendment prevents religious leaders from endorsing candidates from the pulpit to their congregation.  Religious leaders have voiced concerns that the Johnson Amendment violates churches' freedom of speech.  When running for president, candidate Trump vowed that if he were elected, he would find a way to give churches a voice in the political arena and to abolish the Johnson Amendment.

On May 4, 2017, President Trump issued an executive order restricting the Treasury Department from revoking tax-exempt status or imposing tax penalties on any church or religious group that engages in political activity.  President Trump stated, "We are giving our churches their voice back.  No one should be censoring sermons or targeting pastors." Since the majority of the evangelical community supported President Trump on Election Day, he felt it was his duty to reciprocate his promise. 

This executive order signed by President Trump does not remove the Johnson Amendment from our laws.  Total elimination of the Johnson Amendment would require action by Congress to create superseding law.  However, Republicans have promised to repeal the Johnson Amendment as part of its tax reform legislation.

On January 3, 2017, H.R. 172 bill was introduced by Representative Walter Jones, Jr. (R-NC) in the House that amends the IRC by repealing the prohibition against churches and other tax-exempt organizations from participating in political campaigns or supporting opposing candidates for public office.  This bill has only been introduced and has not been voted on by the House. 

H.R. 781 bill was introduced on February 2, 2017 by Representative Steve Scalise (R-LA) that would amend the IRC to permit a tax-exempt organization to make certain statements related to a political campaign without losing its tax-exempt status.  An organization would not lose its tax-exempt status under §501(c)(3) or be deemed to have participated in, or intervened in, any political campaign on behalf of (or in opposition to) any candidate for public office, solely because of the content of any statement that: (1) is made in ordinary course of the organization's regular and customary activities in carrying out its exempt purpose, and (2) results in the organization incurring not more than de minimis incremental expenses.  This bill has yet to be voted on by the House.

Supporters of the Johnson Amendment fear that if churches and religious organizations are permitted the right to conduct political activities, it could lead to the funneling of campaign donations through tax-exempt churches, free of oversight.  Questions being raised are: 

  • How will this affect the charitable donation to churches and religious organizations?

  • Will only a portion or a donation be tax deductible to the contributor if the organization is conducting political activity with the funds?

There are a lot of unanswered questions since the executive order was signed by President Trump.  Until legislation is passed, there are no clear answers to these questions.

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