Texas Nonprofit Challenges IRS Over Free Speech Rules in Significant Court Case

Texas Nonprofit Challenges IRS Over Free Speech Rules in Significant Court Case

A pivotal court case is now underway, scrutinizing the Internal Revenue Service’s multifactor “facts and circumstances” test. This test is accused of infringing on free speech, particularly silencing conservative nonprofits aiming for tax-exempt status.

Freedom Path, a nonprofit organization based in Texas and established in 2011, has focused its efforts on dismantling the Affordable Care Act, commonly known as Obamacare, and advocating for a balanced budget amendment. After enduring a lengthy nine-year administrative battle, the organization asserts that its application for tax-exempt status as a social welfare entity was unjustly denied, with the IRS labeling it overly political.

Chris Gober, CEO of Lex Politica, spoke with Fox News Digital regarding the ongoing case, titled Freedom Path, Inc. v. IRS. His comments came just hours before he represented Freedom Path at its initial court hearing in Washington, D.C. Gober detailed the organization’s lengthy fight and its implications for similar nonprofit groups.

According to Gober, the IRS initiated communication long after Freedom Path’s application was submitted. He recounted, “We applied for tax-exempt status back in 2011. Largely nothing happened for a long time. And then, all of a sudden, about a year and a half later, we got a request from the IRS to say, ‘We need more information, and we need you to disclose your donors to us.’ It was a baffling request, and we told them no.” This development occurred shortly before the infamous Lois Lerner scandal unfolded.

Lois Lerner, who previously held the title of Acting Director of Exempt Organizations at the IRS, was embroiled in controversy when the agency faced allegations of bias against conservative applications for tax-exempt status back in 2013. Lerner acknowledged that the IRS had subjected groups bearing names like “Tea Party” and “Patriots” to intensified scrutiny.

In May 2013, during a meeting with the American Bar Association, Lerner publicly apologized for the IRS’s inappropriate scrutiny of conservative organizations. Despite the passage of time, Freedom Path claims that the agency continues to impose undue pressure on conservative entities.

Gober emphasized that the IRS’s criteria remain unchanged since the targeting events of 2010 and 2011. He stated, “People don’t realize that the IRS is still using the exact same tests and mechanisms. They are nothing new and continue to affect conservative organizations. The same bureaucrats remain, with many promoted since those days.”

The lawsuit filed by Freedom Path seeks a judicial review of the IRS’s 11-factor “Facts and Circumstances” test. The organization argues that the test evaluates whether communications advocating issues can be classified as political campaigning.

The vagueness surrounding this test resulted in Freedom Path feeling compelled to withdraw a television advertisement supporting the repeal of Obamacare. Gober stated that this ambiguity effectively coerces conservative organizations into self-censorship to evade potential government repercussions.

He noted, “The current test is overly ambiguous, allowing IRS agents to arbitrarily classify nonprofit communications as political. It offers no clear standards and is open to subjective interpretation, enabling any desired outcome depending on the IRS agent’s perspective. This unreliability remains our primary concern.”

In the past, similar tests faced legal challenges and were deemed unconstitutional, most notably in the landmark Citizens United case.

Gober pointed out, “The same types of evaluations have already been struck down for enforcement by the Federal Election Commission, yet the IRS insists that these precedents do not apply to them. They continue to apply their rules in defiance of this precedent, and we are determined to hold them accountable for it.”

Freedom Path’s objective is to dismantle the 11-factor test entirely and compel the IRS to establish transparent regulations governing what constitutes political campaign intervention versus issue advocacy.

The organization maintains that it is a properly constituted Section 501(c)(4) social welfare group that should be allowed to engage in constitutionally protected speech without overstepping political boundaries.

Gober predicts that a favorable ruling could significantly influence the operations of over one million nonprofit organizations across the political spectrum in the United States.

He concluded, “This case is not just about one organization. It raises crucial questions about whether unelected officials can wield tax law to suppress political discourse they disapprove of. Every conservative group across the nation should remain vigilant about this situation.”

The IRS has declined to comment on the ongoing litigation.