A federal judge has rejected a proposed IRS settlement that would have allowed churches to endorse political candidates without risking their tax-exempt status, keeping a decades-old restriction firmly in place—for now.
In a ruling issued on Tuesday, U.S. District Judge J. Campbell Barker in Tyler, Texas, said he lacked jurisdiction to approve the consent judgment between the Internal Revenue Service and two Texas churches, plus the National Religious Broadcasters (NRB). The judge cited the Tax Anti-Injunction Act, which prevents courts from ruling on matters that could directly affect tax collection.
The July settlement aimed to exempt routine religious communications from the Johnson Amendment, a 1954 tax code provision that bars nonprofits, both religious and secular, from endorsing political candidates.
The IRS did not immediately respond to Benzinga‘s request for comment.
Tax Season in Full Swing
The ruling comes during peak filing season. IRS data through March 20 shows average refunds climbed 10.9% to $3,571 from $3,221 a year earlier. Total refunds have topped $202 billion, with nearly 57.3 million direct deposits, up 6.5% year-over-year. The filing deadline remains April 15.
The agency is operating with a significantly smaller workforce. IRS staffing fell roughly 26% to about 75,700 employees from over 102,000, following buyouts and layoffs. National Taxpayer Advocate Erin Collins has warned that the reduced headcount, combined with significant tax law changes, poses risks to the filing season.
Scams Rise Amid Growing Refunds
Higher refunds have drawn fraudsters. A McAfee survey found 23% of Americans reported losing money to tax scams, averaging $1,020 per victim. Young adults aged 18–24 were most at risk, with 42% reporting at least one scam encounter.
The IRS flagged its annual “Dirty Dozen” scams, including AI-generated calls, phishing, and fake charities. Taxpayers are urged to get an Identity Protection PIN and verify communications only through official IRS channels.
Disclaimer: This content was produced with the help of AI tools and was reviewed and published by Benzinga editors.
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