Z Street, an organization “devoted to pro-Israel education” filed papers in federal court last week arguing that the Internal Revenue Service continues to engage in behavior which violates its Constitutional rights. The memorandum, which was filed in the US District Court for the Eastern Division of Pennsylvania, is technically “In Opposition to the Government’s Motion to Dismiss the Complaint for Failure to State a Claim” and is a continuation of litigation filed in August of this year.
The basis for the initial complaint is that Z Street believes the IRS is engaging in discrimination by adding a layer of administrative review for applications for tax-exempt status for organizations like theirs that support pro-Israel or pro-Jewish policies. In its paperwork, Z Street refers to this policy as “Israel Special Policy.”
The initial facts leading up to the lawsuit are not in dispute. Z Street made an application to IRS for tax-exempt status and expected a reply within 4-8 months. The application was delayed when, a few months after the application, the IRS representative reviewing the application sent a request for additional information.
What happened after that is what is at issue. Z Street subsequently accused the IRS of “targeting pro-Israel groups” by requiring an additional level of scrutiny on those applications. The IRS doesn’t dispute that they requested additional information based on the application and the group’s activities. Specifically, the IRS agent reviewing the application had two areas of concern:
(1) the advocacy activities in general, and (2) the IRS’s special concern about applications from organizations whose activities are related to Israel, and that are organizations whose positions contradict the US Administration’s Israeli policy. (language taken from Z Street’s Complaint)
The idea that an organization would be questioned about its politics or religious beliefs is not altogether out of the ordinary if the IRS has concerns about the intended purpose of the organization. However, Z Street maintains that IRS went too far. They point to two questions that the IRS is said to have asked which raised eyebrows:
- Does your organization support the existence of the land of Israel?
- Describe your organization’s religious belief system toward the land of Israel.
For its part, Z Street maintains that it does not engage in lobbying or seek to be an “action organization.” Their specific charitable purpose, as outlined in their application, was primarily education and not the promotion of any legislation. You can read their Charter here and decide for yourself.
Z Street claims, however, that the additional scrutiny has little to do with concerns about their actual tax-exempt application; they believe that they are being targeted because their political views are inconsistent with those of the Obama administration. It is, they say, a constitutional issue, which is why they have filed suit in District Court.
There are, however, other remedies available to the organization which they chose to circumvent. That strategy has some folks talking about whether this might be a way to gain some publicity, rather than merely protesting what is perceived as an unfair process (the organization, for the record, is scarcely a year old).
Interestingly, former IRS Commissioner Sheldon Cohen has weighed in on the matter (with an unfortunate choice of words), noting that he was skeptical of Z Street’s motives in filing a high-profile lawsuit rather than waiting for a determination and then filing suit in Tax Court. He said, about the lawsuit:
They were hardly into the process when they screamed rape – nobody lifted the dress yet.
Cohen did, however, refer to the questions posed by the IRS as “unusual.”
Regardless of which side you come down on, the lawsuit does raise a host of interesting questions. Is the IRS making a habit of targeting groups said to be opposed to “established” policy? Is it appropriate to segregate certain applications for additional review when they involve specific countries or issues? Should religion be a part of the review process?
What do you think?
Doesn’t this motion violate section XI of Z Street’s Charter? Seeking approval from our government of their cause:
XI. Z STREET has no need to, and will not negotiate with, nor seek to gain the approval from, any governments, Israeli or Diaspora organizations, or individuals supporting the diminution or weakening of Israel either because of ideological conviction, animosity towards a strong, Jewish State, cowardice, or the misguided belief that compromise with Terrorist Entities can lead to peace in the Middle East or global peace.