It seems that the IRS and the FFRF were entering into a collusive settlement. It sounds like it was supposed to involve a consent decree signed by a judge so that the IRS could claim that it was forced to violate the Constitution.
The Becket Fund stepped in and blocked the settlement and threatened to actually litigate the case, which both the IRS and FFRF knew they couldn't win. Consequently, FFRF dismissed the case RATHER than have judicial precedent AGAINST it.
//FFRF filed the lawsuit in an attempt to force the IRS to enforce the ban, something the IRS has for decades been reluctant to do. The Becket Fund successfully intervened in the suit on behalf of Milwaukee-based Holy Cross Anglican Church and its vicar, Father Patrick Malone, a Benedictine abbot. The church argued that FFRF's suit must fail because enforcing the Johnson Amendment against its internal religious speech would violate federal constitutional and statutory law.
"The IRS has long threatened churches with speech restrictions but hasn't been willing to do much more for fear of losing in court. But FFRF's suit, which tried to force the IRS to make good on its threats, gave houses of worship a chance to fight back. Once FFRF realized its error, it packed up shop quickly," Blomberg said.
"It's remarkable to see the collusive way that FFRF and the IRS orchestrated getting out of this suit as fast as they could. From hiding documents to falsely promising to provide information, they did whatever they could to run away quickly," he added.//