Z Street and the IRS

The Z Street case may be what forces the IRS to pull aside its carefully constructed curtain and reveal how it made decisions regarding organizations deemed out of step with the current US administration.

June 5, 2014 21:44
3 minute read.
Settler youth at Ulpana outpost

Settler youth at Ulpana outpost 370. (photo credit: Courtesy Beit El Residents)


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Last spring, the US media were filled with accusations that the Internal Revenue Service was using its power over nonprofits to stifle opposition to the Obama administration.

While congressional efforts to investigate the alleged wrongdoings have been stymied, a decision by a federal judge in Washington may force the IRS to disclose whether a small, staunchly pro-Israel group was victimized.

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Judge Ketanji Brown Jackson of the US District Court for the District of Columbia threw out every legal defense the IRS raised in Z Street v.

Koskinen, IRS Commissioner. She ordered the IRS to provide a substantive answer to Z Street’s complaint by June 26.

Z Street brought its lawsuit for viewpoint discrimination after, it alleges, the IRS agent to whom the organization’s file had been assigned said Z Street’s application for tax exemption might take a long time to process because the IRS “has to give special scrutiny to organizations connected to Israel,” and that the files of some of those applicants “will be sent to a special unit in Washington to determine whether the activities of the organization contradict the public policies of the administration.”

If borne out by the evidence, this would be an astounding violation of free speech rights.

Documents disclosed in response to congressional investigation reveal that the IRS created a special category for review of organizations engaged in “disputed territory advocacy.” A legitimate reason for the IRS to have created such a category is hard to imagine.

Judge Jackson stripped away the government’s defenses in a detailed and carefully written opinion.

The essence of the decision is that Z Street was only asking for a constitutionally fair process.

She held that Z Street is entitled to the IRS’s evidence on whether it was receiving such a process.

The judge also ruled that the IRS was wrong to claim it was immune from being hauled into court. The legal doctrine of “sovereign immunity” – literally, the king cannot be sued – is inapplicable when the aggrieved party is alleging the government committed a constitutional violation.

All the many other groups claiming the IRS violated their constitutional rights now have this Z Street ruling to shield them from similar delay tactics by the IRS. It has been four years since Z Street filed its lawsuit and the IRS has not yet filed a single substantive response.

The Z Street case may be what forces the IRS to pull aside its carefully constructed curtain and reveal how it made decisions regarding organizations deemed out of step with the current US administration.

Once the IRS files its response, the investigatory period known as “discovery” will commence in the lawsuit. A lot of people will be paying attention, and so should we.

Perhaps it was J Street – as posted on its website five years ago, or The New York Times or The Washington Post, which coincidentally posted articles making similar suggestions at the same time – that led the IRS to put organizations that support Jewish life beyond the Green Line on a different, more onerous track when seeking tax-exempt status.

But unless Congress makes that decision by changing the law, the IRS is not permitted to punish any organization for its political views, even organizations such as Z Street that support the “settlers” and which do not believe Israel should negotiate with terrorists.

Because if the IRS has been permitted to do that, the United States is a very different place than we thought it was, and every viewpoint is potentially in danger.

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