The U.S. Treasury and the Internal Revenue Service (IRS) are preparing to release new guidance for churches and religious organizations concerning the application of the Johnson Amendment.

Legal Setback and New Guidance

This development follows a legal setback for a proposed agreement that would have exempted churches from the amendment, allowing them to endorse political candidates without risking their tax-exempt status. Treasury Secretary Scott Bessent emphasized the administration's commitment to religious freedom, stating it is a foundational principle of the Constitution.

The new guidance from the Treasury and IRS will aim to provide clarity and uphold the First Amendment. It is designed to offer clear standards for houses of worship, particularly concerning communications made during religious services. Agencies plan to consult with stakeholders before releasing the guidance later this year.

The Johnson Amendment and Previous Agreement

The Johnson Amendment, a provision within the 1954 tax code, prohibits both religious and secular nonprofits from endorsing political candidates to protect their tax-exempt status. The proposed agreement, initially put forward by the IRS under the Trump administration, aimed to exempt traditional religious communications from the amendment.

Court Ruling

U.S. District Judge J. Campbell Barker, a Trump appointee, rejected the agreement, ruling he lacked the jurisdiction to approve it. The IRS had entered the agreement in July, settling a lawsuit brought by the National Religious Broadcasters (NRB) in anticipation of the 2024 presidential election.

Reactions and Appeals

The NRB, represented by general counsel Michael Farris, plans to appeal the ruling, arguing the judge disregarded an Anti-Injunction Act exemption. The Family Research Council, represented by president Tony Perkins, criticized the decision, stating it empowers the IRS to limit the free speech rights of churches.

The IRS’s change of direction and the new guidance signal a continued approach to interpreting and enforcing the Johnson Amendment. The planned guidance reflects an effort to address concerns about religious freedom and the role of religious institutions in public discourse.

It's expected to provide houses of worship with clearer legal standards, impacting how churches navigate communications strategy surrounding elections while maintaining tax-exempt status.