Next year will mark the 70th anniversary of the so-called Johnson Amendment, the provision in section 501(c)(3) that prohibits tax-exempt organizations from endorsing or opposing candidates for office. We really don’t know much about the purpose or motivation of the provision: it was introduced by the-Senator Johnson and approved, without debate, by voice vote, so there’s no legislative history explaining its purpose.
The substance of the prohibition is pretty clear, though: to qualify for tax exemption, an organization must do a handful of things and refrain from doing a handful of others. Under the Johnson Amendment, a tax-exempt organization cannot “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.”
And that’s it: a blanket prohibition on endorsing or opposing candidates. And what are the consequences for an organization that violates the prohibition?
In theory, there are up to two. The first is, it doesn’t qualify as tax-exempt (because it doesn’t meet the requirements).
The second is an excise tax. The tax is 10% of the political expenditure, plus a 2.5% tax on any manager who approved it. If the expenditure isn’t corrected, those amounts rise to 100% and 50%, respectively.
There are, of course, a couple other details that are relevant here. The first is, neither penalty is self-enforcing. The IRS is tasked with revoking exemptions and with imposing excise taxes. And the thing is, while the law is clear, the IRS has administrative discretion in deciding how to deploy its enforcement resources and enforce the law. If it decides not to revoke an organization’s exemption, there is literally nothing the general public can do to force it to act. (I explain the why and the how of it in this article, if you’re interested.)
And how is the IRS’s enforcement? Well, according to a self-study it did earlier this century, pretty much non-existent.
What does this have to do with Mormon blogging?
The Church of Jesus Christ of Latter-day Saints has an explicit policy of staying politically neutral. It does, however, “[r]eserve the right as an institution to address, in a nonpartisan way, issues that it believes have significant community or moral consequences or that directly affect the interests of the Church” (emphasis added).
One thing that I need to point out here: tax-exempt organizations, including churches, can lobby without risking their exemption. The Johnson Amendment only applies an absolute prohibition to supporting and opposing candidates. As long as an organization’s lobbying remains an insubstantial portion of its activities, it’s good with its obligations.
But here’s the thing: Donald Trump is the presumptive Republican nominee for president. And a Trump presidency poses significant community and moral consequences to the country. While I’m not going to list them all here (both for lack of space and because that’s not the topic of this particular blog post), Wednesday night’s CNN town hall demonstrates that he is allergic to the truth. He’s an admitted sexual harasser (who has also been held liable for sexual harassment by a jury), he refuses to accept the results of the 2020 election, he believes in the goodness of the January 6 insurrectionists. He’s willing to reinstate family separations at the border. He brings out and encourages the worst impulses in his fans. A second Trump presidency would be an utter moral (and political and democratic) disaster.
So a thought experiment: what if the church spoke out against him? What if the church invoked its “significant … moral consequences” clause to counsel members to vote against him at the primary and/or (but definitely and) level?
It clearly wouldn’t mean that no member of the church would vote for Trump. The idea that we’re automatons who obey every word from church leaders is a stupid stereotype. I mean, just look at Covid anti-vaxxers in the church.
But members were already at least a little skeptical of Trump; an official statement could provide an excuse for those people who are torn between their dislike of the candidate and their allegiance to the GOP permission, and perhaps incentive, to do the right thing. And Trump is aberrant enough (I hope) that church leaders could say, with complete justification, that the church will continue to stay neutral in normal partisan politics that don’t implicate the moral foundations of the country.
And what about the consequences to the church’s tax exemption?
Well, in the nearly 70 years since the introduction of the Johnson Amendment, one church has had its exemption revoked for violating it. Four days before the 1992 presidential election, the Church at Pierce Creek took out full-page ads in the Washington Times and USA Today. (For our younger readers: those were newspapers. They had big pages. And a full-page ad was kind of a big deal back in the pre-internet world of 1992.) I can’t find an image of the ad (though I swear I’ve seen it), but it was egregious enough that the IRS revoked the church’s tax exemption. The church appealed, and ultimately the Court of Appeals for the D.C. Circuit upheld the revocation.
Part of the court’s justification for revoking the exemption? That it was completely harmless to the church. The court said that, yes, its exemption was gone, meaning it had to pay taxes on its income and donors couldn’t take donations for their deductions. But the “unique treatment of churches” under the tax law means that “if the Church does not intervene in future political campaigns, it may hold itself out as a 26 U.S.C. § 501(c)(3) organization and receive all the benefits of that status. All that will have been lost, in that event, is the advance assurance of deductibility in the event a donor should be audited.” See, churches—unlike other tax-exempt organizations—don’t have to apply for tax exemption. So a church that violates the Johnson Amendment temporarily loses its exemption, but, once it’s done violating, automatically gets it back. (For the record, I think this is wrong as a matter of law, but also, it seems to represent both the IRS’s and the D.C. Circuit’s view.)
So what would happen if the church emailed a letter to be read by all of the bishops in the U.S., a letter that said, “We have seen the damage that a wicked leader can do. While we generally refrain from participating in electoral politics, where it becomes a moral issue, we feel an obligation to speak. And electing Donald Trump would be morally disastrous, both to our members and to the country they live in. We encourage each member to register to vote and to vote against Donald Trump”?
Honestly, probably nothing. Again, the IRS would have to actively enforce the Johnson Amendment, a thing it generally does not do.
But if it decided to? The church would lose its exemption for an instant. But then that instant would end and, as long as the church then ceased to endorse or oppose candidates for office, it would automatically be exempt again. Moreover, even if courts were to decide that the D.C. Circuit was wrong, that represents a significant enough change that I suspect they would apply it prospectively only.
And what about the excise tax? I mean, I don’t know what drafting and sending an email to be read over pulpits costs (though I’m happy to draft it pro bono, if that helps reduce the cost!), but I suspect it is negligible, whether at 10% or 100%.
Should the church make this statement? I don’t know. On the one hand, I prefer political neutrality by churches. On the other, though, the specter of a Trump presidency is terrifyingly bad, and will, frankly, put the soul of our nation at significant risk.
But again, deciding whether or not to do this is far above my paygrade. But saying what the consequences would be if the church did it? On that, I’m good.