CHARITY AND POLITICS: TRUMP V. JOHNSON Marcus S. Owens, Esq. November 2, 2017 Partner Seattle, Washington Loeb & Loeb LLP Washington, DC 202-618-5014 mowens@loeb.com
The “Johnson Amendment” • IRC 501(c)(3) orgs may not “participate in, or intervene in (including the publishing or distributing of statements), any political campaign on behalf of any candidate for public office” • Inserted by then-Sen. Lyndon Johnson (Senate Minority Leader) as a floor amendment to legislation that became 1954 Code • Passed by the Republican-controlled Congress and signed by President Eisenhower 2
Historical Litigation Context • English Courts interpreting common law; trusts to support political parties, candidates, political causes are not charitable • US State Courts: early cases addressed abolition of slavery (charitable), women suffrage (not charitable), bequests to political parties (not charitable) • Conflation of electoral politics and lobbying • Slee v. Commissioner (2 nd Cir. 1930): “political agitation” is not charitable for fed tax purposes 3
Historical Administrative Context • Deportation Act of 1918 – authorized deportation of aliens who are anarchists, who advocate violent overthrow of the government, or belonged to any organization teaching those views; Bureau of Immigration (part of Dept. of Labor) to make deportation decisions • T.D. 2831 (1919): “associations formed to disseminate controversial or partisan propaganda are not educational” • “Propaganda” is that which propagates the tenets or principles of a particular doctrine by zealous dissemination” 4
Historical Enforcement Context • “Palmer Raids” in 1919-1920 focused on enforcing Deportation Acts; FBI raids in 30+ cities, many arrested, held without access to legal counsel, beaten, language barriers. • Sec. of Labor Louis Post overruled 1,500 + deportation orders on due process violations; testifies at confrontational House investigative hearing that aliens “are entitled to the protection of our Constitution.” Later writes that “the public mind was under the influence of what must always be regarded as a monstrous social delirium” 5
Historical Legislative context • House Select Committee to Investigate Tax-Exempt Foundations and Comparable Organizations, a/k/a “the Cox committee,” (1952) named after its Chair, Rep. Edward cox D- GA)- investigated foundations and charities for funding “un- American activities and subversive activities or for purposes not in the interest or tradition of the United States.” • “The Reece Committee” (1952-1955) – when control of the House shifted in 1952 to the GOP, the Cox Committee was renamed after the new Committee Chair, Rep. Reece (R-TN). Continued the Cox Committee investigations, but its mandate expanded to include foundation and charity funding “for political purposes, propaganda or attempts to influences legislation. 6
The Reece Committee • Held 16 hearings • Reece Committee treated lobbying and campaign intervention as two subsets of political activity • Reece Committee recommended: “We advocate the complete exclusion of political activity” by foundations and charities; possible exception for bar associations. • Last hearing held on same day that Johnson proposed his amendment 7
Johnson Amendment Enacted • In its final report, the Reece Committee recommended that the Internal Revenue Code be amended to encompass “the complete exclusion of political activity” for 501(c)(3) organizations—essentially the same proposal that Senator Johnson had put forward. • The Johnson Amendment became part of the Internal Revenue Code of 1954. • Approved without any discussion or debate. • Considered uncontroversial at the time, retained when the Code was updated in 1986 during the Reagan administration. • In the 2010s, the Alliance Defending Freedom made attempts to challenge the Johnson Amendment through the Pulpit Freedom Initiative, which urged Protestant ministers to violate the statute in protest. 8
New Executive Order • On May 4, 2017, President Trump signed Executive Order that directs IRS not to enforce interpretations of the rule with regard to activities that had “not ordinarily been treated” by the IRS as violations of the political activity prohibition. • President Trump touted as a move to unshackle religious organizations from the Johnson Amendment and give them greater freedom to engage in political activity. • "We are giving our churches their voices back and we are giving them back in the highest form, " President Trump said before signing the Executive Order. • However, the actual language of the Executive Order fails to ease any of the existing restrictions on political activities, and in fact reinforces existing IRS interpretations of the Johnson Amendment. • Nothing in the Executive Order undercuts the IRS’s power to continue to take civil and criminal enforcement actions based on violations of the Johnson Amendment. 9
FREEDOM FROM RELIGION V. TRUMP • FFRF seeks injunction against enforcement of Executive Order • DOJ seeks dismissal on lack of standing, lac of support for discriminatory impact, and the Executive Order did not change the law • FFRF amends its complaint to address DOJ response 10
Further Action by Congress? HR 3354 (Make American Secure and Prosperous Appropriations Act) • contains new requirements for IRS audits of churches when politicking implicated, e.g. IRS Commissioner must approve, notification to Ways & Means and Senate Finance • HR 172, introduced by Rep. Jones, would amend IRC 501(c)(3) to delete reference to politicking • HR 781 (Free Speech Fairness Act) adds provision to IRC 501(c)(3) to allow political statements made in the “ordinary course” w/only de minimis cost [also conforms 170, 2055, 2106, 2522 and 4955[ • S 264 (Free Speech Fairness Act) – Senate version of HR 781 11
Other Responses • Community Letter in Support of Nonpartisanship supports retention • Interfaith Alliance supports retention • NASCO Letter supports retention • Conservation groups support repeal 12
QUESTIONS? 13
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