An Update on Johnson Amendment Challenges
Last year, in the run-up to the election, we spent some time discussing the Johnson Amendment. There were plenty of examples proving the prohibition against campaign intervention pretty much unenforceable, both as a practical and legal matter. Organized worshippers, especially and as happens every four years, openly endorsed or opposed candidates. I used to think the world would not come to an end by campaign intervention but I could be wrong, as it turns out.
For a brief moment, there was a well-crafted petition that was sure to force Treasury to defend the prohibition in court. But SAFE SPACE withdrew its petition to give the Service more time to rule on the 1023. SAFE SPACE’s 1023 candidly admits that the nonprofit intends to endorse candidates so I am not quite sure what the hold up is. Anyway, there is no word on when the Service will act on the application and the complaint has not been re-filed.
The other well-publicized Johnson Amendment challenge involves the National Religious Broadcasters, two churches and another religious organization. In that case, the plaintiffs assert that the campaign intervention prohibition violates all sorts of Constitutional rights, from equal protection to the free speech and free exercise of religion. Honestly, the complaint is so poorly written that it ought to be dismissed for that reason alone. But, well, if you read it enough times with a charitable mind you can almost discern the argument that the TWR solution doesn’t work for organized worshippers because politics is part and parcel of worship. Politics can’t be farmed out to a related (c)(4) without diluting the religious worship or speech, according to the plaintiffs. I am not sure the Court is going to want to read it that many times and if I had to bet, I would say it’s headed for dismissal. Too bad, because the complaint might have had a chance if it were better pleaded.
DOJ Tax filed its Motion to Dismiss the complaint just before Christmas last year. The NRB and churches have not yet filed a response, though they have been granted an extension of time in which to do so. The motion relies primarily on standing and the declaratory judgment act (which excludes actions “with respect to Federal taxes”) as the basis for dismissal. Here is a summary of the argument:
III. INTRODUCTION
It is fundamental that Congress’s refusal to subsidize lobbying and other political activity through tax benefits does not infringe the First Amendment to the United States Constitution. See Regan v. Taxation With Representation of Washington, 461 U.S. 540, 546 (1983) (“Congress has not infringed any First Amendment rights or regulated any First Amendment activity. Congress has simply chosen not to pay for TWR’s lobbying.”); Cammarano v. United States, 358 U.S. 498, 513 (1959) (“Petitioners are not being denied a tax deduction because they engage in constitutionally protected activities, but are simply being required to pay for those activities entirely out of their own pockets.”); Branch Ministries v. Rossotti, 211 F.3d 137, 144 (D.C. Cir. 2000) (“Congress has not violated an organization’s First Amendment rights by declining to subsidize its First Amendment activities.” (cleaned up) (citing Taxation With Representation, 461 U.S. at 548). Yet Plaintiffs’ Complaint ignores the clear distinction between a law that restricts political speech and one that simply declines to promote it on a nondiscriminatory basis.
Plaintiffs’ Complaint seeks a declaratory judgment that a portion of Section 501(c)(3) of the Internal Revenue Code (26 U.S.C.) concerning limitations on certain political activities as a condition of their continued tax-exempt status violates the Religious Freedom Restoration Act (RFRA) and the First and Fifth Amendments to the United States Constitution. Plaintiffs admit they have not engaged in the kinds of political activities that might cause them to lose their tax exempt status. Plaintiffs also admit the IRS has not taken any action against them. For several reasons, Plaintiffs’ Complaint fails to invoke the Court’s jurisdiction and states no claim for relief.
First, Plaintiffs have failed to show any injury in fact to satisfy the doctrine of standing as required by Article III of the Constitution. Plaintiffs demonstrate no intent to “engage in a course of conduct arguably affected with a constitutional interest” or that their allegedly intended conduct is “arguably proscribed by statute.” Speech First, Inc. v. Fenves, 979 F.3d 319, 330 (5th Cir. 2020).
Second, Plaintiffs’ suit is barred by the Declaratory Judgment Act’s, 28 U.S.C. § 2201, (DJA’s) federal tax exception because this suit is “with respect to Federal taxes” and is not an action “brought under section 7428 of the Internal Revenue Code.” Because the DJA’s federal tax exception is jurisdictional, the Court has no power to award the relief Plaintiffs seek in this case.
Third, except for Plaintiffs’ claim under the RFRA, Plaintiffs have failed to show that the United States waived its sovereign immunity for any of the claims here. A waiver of sovereign immunity is a jurisdictional prerequisite that a plaintiff must plead. Thus, the Court has no jurisdiction over those claims for which Plaintiffs fail to show any waiver of sovereign immunity.
Fourth, Plaintiffs have failed to state any claim for which relief may be granted. Their claims rely on an erroneous point of law that supports no cognizable legal theory. Plaintiffs incorrectly characterize Section 501(c)(3) as a statute by which Congress has restricted constitutionally protected activity. Section 501(c)(3) restricts no activity—it sets eligibility requirements for an organization to be eligible for a government subsidy administered through the tax system. Plaintiffs remain free to intervene in political campaigns if they so choose even if they cannot receive tax-exempt status and tax-deductible contributions under Section 501(c)(3). Plaintiffs may operate as for-profit entities and engage in political activities as they see fit. They may also retain their Section 501(c)(3) exempt status and create Section 501(c)(4) affiliates which may engage in limited political campaign activities but would be ineligible for tax-deductible contributions.
Because all of Plaintiffs’ claims rest on the erroneous assertion that Section 501(c)(3) restricts constitutionally protected activity, they fail to state any claim for relief.
darryll k. jones