The Johnson Amendment, which has been in the news from time to time for the last couple of years, is sometimes described as prohibiting tax exempt churches from campaigning for candidates for elected office. That is accurate, but it applies more broadly than to churches. No organization is eligible for tax exempt status under Section 501(c)(3) of the Internal Revenue Code if it
participate[s] in, or intervene[s] in (including the publishing or distributing of statements), any political campaign on behalf of (or in opposition to) any candidate for public office.
Last year, the President signed Executive Order 13798 that directed the Secretary of the Treasury to:
ensure, to the extent permitted by law, that the Department of the Treasury does not take any adverse action against any individual, house of worship, or other religious organization on the basis that such individual or organization speaks or has spoken about moral or political issues from a religious perspective, where speech of similar character has, consistent with law, not ordinarily been treated as participation or intervention in a political campaign on behalf of (or in opposition to) a candidate for public office by the Department of the Treasury.
Although some described Executive Order 13798 as a repeal of the Johnson Amendment, that is a considerable overstatement. The practical effect of the order is uncertain, but it does not repeal the Johnson Amendment.
The original version of the tax bill passed by Congress earlier this year contained a provision that, while not repealing the Johnson Amendment altogether and not applying broadly to all 501(c)(3) organizations, would have mitigated its effect on churches and other religious organizations. It would have provided that, with certain conditions, an organization could not be denied tax exemption under the Johnson Amendment “solely because of the content of any homily, sermon, teaching, dialectic, or other presentation made during religious services or gatherings.” That provision was not included in the final version of the statute passed by Congress and signed by the President.
Those interested in following the discussion of the Johnson Amendment, which will almost certainly continue, may want to read a short, but informative description of the history of the Johnson Amendment recently published by the Stanford Social Innovation Review. Although I have never studied the history of the amendment in detail, and even though the author does not purport to have an unbiased view of the Johnson Amendment, the article is consistent with my general understanding of how the Johnson Amendment came into being in 1954.
The article makes one point that is worth clarifying. The author points out that the Johnson Amendment does not apply to organizations that are tax exempt under Section 501(c)(4) and that 501(c)(3) organizations often have companion 501(c)(4) organizations. Both of those statements are true, but the reason for the distinction is not as mysterious as the article suggests. Although Section 501(c)(4) organizations are exempt from paying income tax, contributors to 501(c)(4) organizations are not allowed to deduct the contributions from their own taxable income, as are people who make contributions to 501(c)(3) organizations. Moreover, a section 501(c)(4) organization that is related to a 501(c)(3) organization must be supported by its own direct, nondeductible contributions. The relationship does not permit the 501(c)(3) organization to receive tax deductible contributions and redirect them to the 501(c)(4) organization.