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The Internal Revenue Service has opened the door for church leaders to endorse political candidates from the pulpit, leaving nonprofits and religious leaders wondering what this will mean for the future of the sector and where the IRS will draw the line.
The federal tax agency said in a legal filing that it does believe it should be enforcing a 70 year old tax code prohibiting nonprofits from endorsing candidates and interfering in elections against houses of worship when they are doing so in normal communication channels “through the lens of faith.”
The statement was sent to a federal judge in Texas as a proposed agreement to settle a lawsuit brought against the IRS by two churches, a Christian advocacy nonprofit and the National Religious Broadcasters. The plaintiffs argue that the government cannot restrict churches’ speech under the First Amendment, asserting that endorsements made during religious services are protected religious expression. While nonprofits have always been able to discuss issues, they have been prohibited from endorsing candidates under a federal tax law known as the Johnson Amendment.
The judge has yet to rule on the settlement agreement, but experts say that even if it is not accepted, it sends a signal to churches that IRS enforcement of the prohibition on some political activity is unlikely.
Church’s special tax exempt status
Most churches are treated as tax-exempt under section 501(c)(3) without applying to the IRS for that status. Donors can claim tax deduction on donations to churches without the church ever having to formally apply for the special status. Unlike most other charities, they do not have to file the annual Form 990 that nonprofits use to report operations and finances. Because Form 990 is the IRS’s main transparency tool for nonprofits, much less financial information about churches is provided to the IRS, or publicly available, compared with other 501(c)(3) organizations. Churches also have special audit protections. To enjoy these tax benefits, churches, like all other nonprofits, have been subject to rules against taking part in political campaigns and lobbying for about 70 years.
inewsource previously wrote about the role politics plays in driving San Diego-based Awaken Church and their advocacy for then presidential candidate Donald Trump and other conservative candidates. Pastors gave pulpit endorsements for Trump and posted voter guides on the church website.
Four legal experts told inewsource that Awaken, in making the endorsements and posting voter guides, appeared to be violating IRS rules that prohibit 501(c)(3) nonprofits from intervening in political campaigns.
According to the IRS in the proposed settlement, that kind of behavior is not illegal.
San Diego County residents represent a range of religious affiliations. About half, or 53%, say they’re Christian, according to a survey from the Pew Research Center. Another 40% are unaffiliated. The largest Christian denomination in San Diego is Catholic followed by Evangelical and mainline protestant churches. About 6% of San Diegans say they are Jewish, Hindu or follow other world religions.
inewsource reached out to leaders of several San Diego churches, including Awaken, for comment on this story. Most did not respond in time for publication.
But Kevin Eckery, the communications director for the San Diego Catholic Diocese, said the ruling means “virtually nothing” for San Diego Catholics and the church wouldn’t be making any changes.
“There is nothing in Catholic teaching that is distinctly Democratic or Republican,” Eckery said. “For the most part, churches don’t want to reduce themselves to politics. They are supposed to have their eye on bigger issues than that.”
Other religious groups have voiced opposition to loosening restrictions on church political activity.
The Evangelical Lutheran Church in America, which has several San Diego locations, said in a statement that candidate endorsements are incompatible with church-state safeguards. The Religious Action Center of Reform Judaism condemned the policy as undermining democratic and religious institutions. The leader at the Interfaith Alliance, a nonprofit that advocates for religious freedom, warned the IRS’ reading of the law “could turn some religious institutions and organizations into thinly-veiled fronts for partisan groups and candidates.”
Nonprofits more broadly have also sounded alarms. As of this month, 1,500 nonprofits have signed a letter to President Trump warning of the danger the policy poses to the sector, fearing that if churches are allowed to make endorsements, the policy will soon apply to all nonprofits. The policy could put tremendous pressure on nonprofits to endorse candidates and create another dark money loophole for political donors, who can get deductions for donating to nonprofits but not for campaign finance donations, the letter’s authors said.
That’s the desired outcome for some pushing the change, said National Council of Nonprofits CEO Rick Cohen.
“There are some who really want this provision of law to go away so that they can funnel their money through, get a tax deduction for the same contribution they were going to make somewhere else,” Cohen said.
“We want the protection to continue, it truly is something that helps. Because instead of saying, no, we don’t want to endorse, you can say, no, we cannot endorse. It’s very different.”
Pushback from legal experts
Several legal groups have opposed the settlement and asked the judge to deny it. They argue it would let houses of worship endorse or oppose candidates in sermons and online, opening a new path for anonymous, tax-deductible dark money to influence elections with “profound” risks to the integrity and transparency of elections. The groups add that the way this change is being made is not allowed: a court may approve a settlement only if it isn’t unlawful or against public policy, and the parties can’t use a settlement to give themselves powers they don’t have outside of court. In their view, the proposal tries to do by court order what Congress has not authorized and conflicts with the established tax law, so the judge should say no. Still, if the settlement is accepted, it would change tax policy. Here are the legal arguments from Campaign Legal Center and other groups against the change and the plaintiffs argument for the change.
The IRS’ interpretation of the law in the settlement doesn’t allow for churches to engage in campaign spending or fundraising, but experts say it leaves the boundaries of permissible church political activity unclear. For example, what happens if a regular church newsletter contains a candidate endorsement alongside other church news?
Experts say that churches might feel emboldened to go beyond the limits in the proposal.
“We all know that when the speed limit is 65, you kind of drive 75,” said Brad Onishi, a scholar who studies Christian Nationalism and the history of Evangelicalism.
Awaken Church in San Diego is part of a growing movement of evangelical churches that have embraced Dominionism and Christian Nationalism, the idea that God has called Christians to take control of political and cultural institutions and reshape them according to biblical principles. The movement turned out as a key voting bloc for Trump, with leaders working to promote his candidacy.
Since returning to the White House in January, Trump has taken several steps cheered by many on the religious right beyond the IRS’s proposed settlement. He issued an executive order declaring the U.S. will recognize only two sexes and moved to roll back LGBTQ+ protections and DEI programs across federal agencies. He signed an executive order creating an anti-Christian bias task force to “eradicate” discrimination against Christians across the federal government.
His administration issued new federal workplace guidance telling employees they may openly express—and try to persuade coworkers about—their religious beliefs. Defense Secretary Pete Hegseth led a Christian prayer service at the Pentagon during the workday.
“It’s kind of a moment for them to sit back and see what else they’re gonna get for Christmas,” said Onishi, who once identified as an Evangelical Christian Nationalist but has since come to see the movement as a threat to democracy.
“You may think this is not gonna change that much,” Onishi continued. “There have already been on both sides churches that have been doing this work. On the other hand, I think now you’re gonna see politicians recruiting churches in order to get endorsements, and those endorsements will mean a lot… If you have a really big megachurch in a smallish town or a suburb, if you have the endorsement of the local mega-pastor, then that’s gonna go a long way.”
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