IRS (file)
IRS (file)Reuters

The Internal Revenue Service (IRS) lost an important lawsuit on Friday, after the D.C. Circuit Court of Appeals ruled that a pro-Israel non-profit organization was wrongly discriminated against. 

Z Street has accused the IRS of violating the First Amendment by putting pro-Israel organizations that apply for tax-exempt status to a more stringent review than other organizations.

The non-profit organization Z Street, which opposes Israeli withdrawals, compromises with terrorists and supports Jewish rights over Judea, Samaria and Gaza, applied for tax-exempt status in 2009.

The group reports than on July 19, 2010, an IRS agent assigned to their case told them that the IRS gives "special scrutiny" to groups connected to Israel, especially those with views that "contradict those of the administration's." The group was given to understand that such cases are sent to a special IRS unit.

In a formal Opinion released Friday, the court ruled that unanimously that Z Street's application was a legitimate claim, not just a means of evading taxes; that the IRS is not entitled to Sovereign Immunity; and that this case falls under injunctions preventing the IRS from discriminating against specific viewpoints or organizations. 

The ruling could be precedent-setting in reversing what Z Street calls the "Special Israel Policy," and the ruling also sheds light on yet more discrimination from the administration of US President Barack Obama days before an explosive tell-all book is due to be published on the subject.