IRS grants religious group tax-exempt status after backlash

After sparking national backlash with its decision to reject the tax-exempt status request for a Texas-based Christian group, the IRS has now reversed course. 

Christians Engaged, which describes itself as "educational, Christian and non-partisan," hailed the IRS’ decision to grant the group 501(c)(3) tax-exempt status as a victory "for every Christian organization around America that teaches the Bible and cares about the future of our great nation." 

"We are incredibly thankful to the IRS for doing the right thing, and we look forward to continuing our mission of educating more followers of Jesus to pray for our nation and to be civically engaged," Christians Engaged Bunni Pounds said in a statement. "When we stand up, our republic works for all Americans!" 

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Stephen Martin, the IRS director of exempt organizations, sent the group a letter in May, saying that it used bible teachings "typically affiliated with the Republican Party and candidates" to educate individuals on how to vote." 

By teaching members about issues such as "the sanctity of life, the definition of marriage, biblical justice, laws vs. lawlessness, freedom of speech, religious liberty, government and business ethics, human trafficking, fiscal responsibility in government budgeting, defense, borders and immigration, U.S. and Israel relations," Martin said the group had "engaged in prohibited campaign intervention."

The initial decision not to grant Christians Engaged tax-exempt status prompted backlash from Republican lawmakers who called on the head of the IRS late last month to remove Martin. 

In a letter to Commissioner Charles Rettig, Texas Republican Rep. Chip Roy and 14 other congressional Republicans called Martin’s decision "blatantly biased, discriminatory, and flawed." 

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On Wednesday, Roy issued a statement saying he was "encouraged by the IRS’s decision to reverse course." 

"While I welcome this reversal, the IRS staff responsible for the initial determination still must be held to account and should be terminated," he said. 

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First Liberty Institute, a conservative Christian legal organization based in Texas, represented Christian Engaged in an appeal of the IRS’ decision. 

"This is truly great news for our client, as well as religious organizations and churches across America," Lea Patterson, Counsel for First Liberty Institute, said in a statement. "We are grateful the IRS changed course to bring its decision into line with the Constitution and its own regulations."

Fox Business’ Caitlin McFall and Megan Henney Contributed to this report.