Four nonprofit organizations, including two churches and two religious broadcasters, filed suit challenging the “Johnson Amendment,” the portion of Internal Revenue Code § 501(c)(3) that restricts tax-exempt organizations from participating in certain political activities. In particular, the Johnson Amendment provides that organizations qualifying for tax-exempt status may not participate or intervene in political campaigns on behalf of or in opposition to candidates for public office. Violation of this restriction can result in loss of tax-exempt status and the loss of tax-deductibility for donor contributions. The plaintiffs alleged that this framework effectively forced them to self-censor and violated their First Amendment rights.
The plaintiffs sought a declaration that the Johnson Amendment is unconstitutional and an injunction preventing the IRS from enforcing it. The government ultimately agreed to a narrower interpretation of the Johnson Amendment as applied to the plaintiff churches. Specifically, the IRS took the position that internal communications by a house of worship to its congregation, made in good faith through customary religious channels and in connection with religious services, do not constitute participation or intervention in a political campaign within the meaning of the statute. The parties jointly sought to have this interpretation memorialized in a consent judgment, which is a court-approved settlement entered as a binding judgment.
In ruling on whether to agree to this proposed consent judgment, the Court first examined whether it had jurisdiction to grant such relief.
The Court held that it lacked jurisdiction under the Anti-Injunction Act (AIA) and the tax exception to the Declaratory Judgment Act (DJA), which prohibit federal courts from issuing orders that would preemptively restrain the assessment or collection of taxes or declare rights with respect to federal taxes, respectively. The Court explained that the Johnson Amendment operates as a condition of receiving tax benefits, namely income tax-exempt status for the nonprofit and deductible contributions for donors, and that enjoining its enforcement would directly affect how taxes are assessed. Even though the plaintiffs framed their claims in constitutional terms, the Court emphasized that the requested relief would still interfere with tax administration and therefore fell within these jurisdictional bars.
The Court also rejected the parties’ attempt to resolve the case through a consent judgment, explaining that subject-matter jurisdiction (i.e., the court’s authority to hear a certain type of case) cannot be created by agreement. Because the jurisdictional limitations are statutory and mandatory, the Court could not approve a settlement that it otherwise lacked authority to enter.
Finally, the Court declined to apply a narrow judicially created exception that sometimes permits pre-enforcement challenges to tax laws. To qualify for that exception, a plaintiff must both show that (1) under no circumstances could the government possibly prevail on the merits; and (2) the irreparable harm would occur absent an injunction because plaintiff lacks any adequate alternative remedy. The Court found that neither requirement was satisfied. It explained that the plaintiffs’ constitutional claims were at least debatable, meaning the government could potentially prevail, and therefore the first prong was not met. The Court also found that alternative avenues for review exist, including refund actions after a tax is assessed or a statutory procedure allowing nonprofits to challenge the IRS’s determinations regarding tax-exempt status, before paying the tax. Because these remedies provide a path to judicial review, the Court concluded that the exception did not apply.
Accordingly, the Court dismissed the case without prejudice for lack of subject-matter jurisdiction, without reaching the merits of the constitutional claims as to the Johnson Amendment.
Nat’l Religious Broads. v. Bessent (E.D.Tex. Mar. 31, 2026, No. 6:24-cv-00311) 2026 LX 179375.
Note: This case has drawn national attention because the IRS agreed, in the proposed consent judgment, to a narrower interpretation of the Johnson Amendment as applied to the two plaintiff churches, suggesting that endorsing candidates by a religious organization would not constitute prohibited political activity. While the consent judgment was limited to those two churches, this case was already being cited as a potential basis for broader arguments by religious nonprofits, and possibly other nonprofits (including schools), seeking greater latitude to take positions for or against political candidates. Because the court rejected the settlement on jurisdictional grounds, the Johnson Amendment remains unchanged for now.