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Lawsuit on the Johnson Amendment Dismissed by Texas Court
A Texas federal district court released its decision earlier this week, dismissing a case involving a proposed legal settlement with the IRS, which, if approved, would have undermined a landmark federal law, called the Johnson Amendment, that has protected charitable nonprofits, including churches, food banks, and community groups, from partisan politics for more than 70 years.
In its decision, the court held that it is barred from hearing the case under the Tax Anti-Injunction Act (AIA). The AIA applies here because the issue revolves around whether the two churches involved in the case would lose their tax-exempt status - and therefore, face tax liability - if they engage in partisan politics.
Instead, the court suggests that the plaintiffs could seek relief in other forums. For example, a refund suit could be brought if a tax were ultimately collected, or the plaintiffs could seek a declaratory judgement in United States Tax Court, the United States Court of Federal Claims, or the district court of the United States for the District of Columbia. The court decided that the case does not fall under an exception to the AIA, finding that it is not "certain" that the government would fail on the merits. The judge wrote, "given the open-textured nature of the legal provisions at issue here and the wide array of potential facts discussed in the complaint, the court is not prepared to find plaintiffs’ contentions so undebatable as to foreclose any possibility of government success."
While the legal settlement would have been limited to only the two churches involved in the case, it could have led to significant harm to the entire nonprofit sector. Charitable nonprofits are one of the few places left in American society where political party labels and ideology are left at the door – places where people come together across differences to address community needs.
To read the National Council of Nonprofits' press release about the case, click here.
Government Shutdown Update
Last week, House Speaker Mike Johnson said the House would not consider the Senate bill to reopen the Department of Homeland Security and fund all of the department except Immigation and Customs Enforcement (ICE) and Customs and Border Protection (CPB). On Wednesday, he changed his mind and said the House would consider the measure. The House will return from recess on April 14th and is not likely to consider it before then. If the bill does pass the House, President Trump is expected to sign it.
The current shutdown has lasted 49 days. President Trump has signed an executive order, for TSA agents to begin receiving backpay after the shutdown prevented them getting paid, He said yesterday he would sign a second Executive Order to pay all Department of Huomeland Security employees who have gone without paychecks.
It is very likely that Republicans will try to fund ICE and CPB through a second tax reconciliation bill, which because of the structure of the bill would not require Democratic support to pass,.
Proposed Changes Harming Federal Grantees and Their Communities Update
More than 1,300 organizations signed a letter led by the National Council of Nonprofits (NCN) and Legal Defense Fund, and more than 20,000 public comments were submitted to oppose changes proposed by the Trump Administration impacting federal grantees.
This is an amazing outcome! This advocacy plays a critical role in helping to defeat this proposal and ensuring that nonprofits – and the communities they serve – will not be harmed.
If implemented, the proposed changes would require all federal grantees to sign new certifications under penalty of criminal and civil law. The proposal also requires new certifications related to undocumented immigration and terrorism.
Now that the comment period has ended, the General Services Administration is expected to send the proposal to the Office of Management and Budget (OMB) for review before it can be finalized. This will trigger a second comment period, during which NCN will share revised resources to help nonprofits continue to make their voices heard. If the Trump Administration finalizes the proposed changes, we anticipate that several lawsuits will be filed to challenge the new certifications in court.
New Resource: Advocating for Federal Spending: A Practical Guide for Nonprofits
The National Council of Nonprofits has published Advocating for Federal Spending: A Practical Guide for Nonprofits. This guide is designed to help nonprofits understand how to effectively advocate for the federal resources that matter most to the people and communities they serve. It includes key information on how Congress enacts federal funding, where there are opportunities for advocacy, and more. Let us know if this resource is helpful to you!
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