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white house.jpgIsrael NN (photo file)

Z Street, a pro-Israel non-profit corporation, filed a lawsuit in federal court  Wednesday charging that the IRS violated the organization’s First Amendment rights.  The suit was filed after Z Street was told by an IRS official that its application for tax-exempt status has been delayed because an IRS policy requires consideration of whether a group’s views on Israel differ from those of the current Administration.

“Not only is it patently un-American but it is also a clear violation of the First Amendment for a government agency to penalize an organization because of its political position on Israel or anything else,” said Z Street president Lori Lowenthal Marcus, a former First Amendment lawyer.   “This situation is the same as if the government denied a driver’s license to people because they were Republicans or Democrats. It goes against everything for which our country stands.”

Z Street filed for tax-exempt status in January of this year and, despite having met all of the requirements for grant of this status, the application has been stalled.  An IRS agent told Z Street’s lawyers that the application was delayed because of a Special Israel Policy that requires more intense scrutiny of organizations which have to do with Israel, in part to determine whether they espouse positions on Israel contrary to those of the current Administration.

Z Street is a Zionist organization that supports Israel’s right to refuse to negotiate with, make concessions to, or appease terrorists.  Z Street’s positions on Israel and, in particular, on the Middle East “peace process” differ significantly from those espoused by the Obama administration. 

If Z Street had tax-exempt status, its donors would be able to deduct contributions from their taxable income. The IRS's refusal to grant tax-exempt status to Z Street has inhibited the organization‘s fundraising efforts, and therefore impeded its ability to speak and to educate the public regarding the issues that are the focus and purpose of Z Street.

The lawsuit, Z Street v. Shulman, Commissioner of Internal Revenue, was filed on Wednesday in the United States District Court for the  Eastern District of Pennsylvania.

Josh Nathan-Kazis of The Jewish Daily Forward, calling the group "hawkish", reported:

The 1983 U.S. Supreme Court decision in the case of Bob Jones University v. United States could be interpreted to deny nonprofit status to organizations that oppose established American foreign policy... It was written to bar tax exempt groups from participating in racial discrimination.

Legal experts were split on the question of longstanding foreign policy, such as America’s opposition to Jewish settlements in the West Bank, could fall within the realm of “public policy” as described in Bob Jones. All agreed, however, that the IRS had never used Bob Jones to deny tax-exempt status to nonprofits that oppose American foreign policy.

A July story in The New York Times drew attention to the issue of tax-exempt American organizations that support settlements in the West Bank.

Ben Smith of Politico.com, repeating the "hawkish" adjective, wrote:

IRS Agent Diane Gentry told the group's lawyer that the IRS is "carefully scrutinizing organizations that are in any way connected with Israel," the complaint, filed in federal district court in Pennsylvania, says. "Agent Gentry further stated to counsel for Z Street: 'these cases are being sent to a special unit in the D.C. office to determine whether the organization's activities contradict the Administration's public policies.'"

IRS spokesman Bruce Friedland responded: "The IRS, by law, cannot comment on specific charities or even confirm whether a specific exemption request exists."

The Forward report added that the IRS responded that reasons for delay could include other parties that file petitions against giving a group tax exempt status.