The agency's agreement in a court filing formally reverses a decades-old provision of the tax code, but the motion would need to be approved by a judge.

The change in IRS code came after a lawsuit tried to challenge the Johnson Amendment, a longstanding principle of separation of church and state that exists to prevent religious organizations from functioning as de facto political PACs, which are financed through tax-deductible donations.

The IRS says pastors endorsing political candidates during services should not risk losing their tax-exempt status.