Z Street founder Lori Lowenthal Marcus: “The settlement gives us the truth, but we can’t get back our seven years”
Readers are familiar with the IRS targeting of Tea Party and conservative groups seeking tax-exempt status.
But there has been another targeting story percolating through the court system that has received little attention, until now.
The IRS also targeted groups related to Israel. The facts came to light in a litigation brought by Z Street, which waited 6 years for approval.
The founder of Z Street, Lori Lowenthal Marcus, explained the significance of Z Streets lawsuit against the IRS, and how it related to the IRS failure to preserve documents about Tea Party targeting, in this 2014 interview:
Marcus told the story in an Op-Ed yesterday in The Wall Street Journal, The IRS Campaign Against Israel—and Us:
The first IRS viewpoint discrimination case to be filed, Z Street v. IRS, has been settled, with disturbing revelations about how the Internal Revenue Service treated pro-Israel organizations applying for tax-exempt status.
I founded Z Street in 2009 to educate Americans about the Middle East and Israel’s defense against terror. We applied for tax-exempt status under Section 501(c)(3) of the tax code in December 2009—a process that usually takes three to six months.
Instead, the application languished. In late July 2010, an IRS agent truthfully responded to our lawyer’s query about why processing was taking so long: Z Street’s application was getting special scrutiny, the agent said, because it was related to Israel. Some applications for tax-exempt status were being sent to a special office in Washington for review of whether the applicants’ policy positions conflicted with those of the Obama administration.
Marcus goes on to describe what was learned as a result of Z Street’s 2010 lawsuit, that the IRS was looking for groups that conflicted with Obama’s policies, in this case the disputed territories of Judea and Samaria (the “West Bank”):
Now we know the truth, and it’s exactly as bad as we thought. IRS documents—those they didn’t “lose” or otherwise fail to produce—reveal the following:
• Our application was flagged because Z Street’s mission related to Israel, a country with terrorism. Therefore, an IRS manager in our case said in sworn testimony, the IRS needed to investigate whether Z Street was funding terror.
• Some applications for tax-exempt status were indeed being sent to IRS headquarters in Washington for more intense scrutiny. They were selected because of the applicants’ viewpoint.
• In August 2010, three other Jewish organizations applying for tax-exempt status were asked by the IRS to “explain their religious beliefs about the Land of Israel.”
….The “terror” error turns out to have been a pretext. Within weeks of President Obama’s inauguration, IRS and State Department officials began considering whether they could deny or revoke tax-exempt status for organizations that provided material support to Jews living across the Green Line—the nonborder that delineates pre-1967 Israel from the territories Israel acquired in the Six Day War. The theory was that a Jewish presence in those areas is inconsistent with U.S. policy. The IRS drew up lists of such organizations based on information from anti-Israel websites such as Electronic Intifada and MondoWeiss.
The New York Times and the Washington Post ran articles that advanced the policy espoused by the Obama administration and its nonprofit ally, J Street. Unnamed “senior State Department officials” were quoted as saying that Jewish activity over the Green Line isn’t “helpful” to peace efforts.
While no formal policy was released barring U.S. tax-exempt entities from supporting Jewish activity over the Green Line, Obama IRS officials tried three times between 2009 and 2012 to create such a policy, and IRS employees made sure the effort wasn’t documented. One emailed her supervisor saying that she would answer his questions about IRS policy relating to Israeli settlements only orally. “Not doing email on this,” she explained.
The Z Street lawsuit has just been settled and the IRS has apologized, as this DOJ announcement: reflects
The Department of Justice today announced that it has entered into a settlement with Z Street, a non-profit corporation dedicated to educating the public about various issues related to Israel and the Middle East, pending approval by the United States District Court for the District of Columbia. Z Street alleged that the Internal Revenue Service (IRS) applied heightened scrutiny to applications for tax-exempt status received from organizations connected in any way to Israel, and applied this policy to Z Street’s application, resulting in delay. The settlement agreement includes an apology from the IRS to Z Street for the delayed processing of the group’s application for tax-exempt status.
“Tax exemption eligibility should be based on whether an organization’s activities fulfill requirements of the law, not a group’s policy positions or the name chosen to reflect those views,” said Principal Deputy Assistant Attorney General Zuckerman. “The attorneys at the Department of Justice work hard to ensure that all Americans receive equal treatment under the law. Today’s settlement further illustrates this commitment.”
Marcus summed up the result of the IRS targeting, in language strikingly familiar to those who followed IRS targeting of Tea Party and conservative groups:
To learn the truth, we fought in the courts for seven lonely years—defeating IRS arguments that it didn’t have to obey the First Amendment, that it was immune from the suit, and that it wasn’t obliged to produce in discovery any documents revealing why its employees did what they did. During the seven years Z Street’s application was frozen, it couldn’t raise funds. If my husband and I weren’t lawyers, able to pursue justice without getting paid, there’s no way we could have succeeded.
When Z Street’s creation was announced, thousands sought to join. Then the IRS attempted to kill us. No lawsuit can remedy that assault, as the IRS knew. The settlement gives us the truth, but we can’t get back our seven years.
The Z Street case is another reminder of the danger the politicized Obama bureaucracy posed, and may still pose.DONATE
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