US Department of Justice (illustrative)
US Department of Justice (illustrative)צילום: iStock

The Justice Department settled with Z Street, a right-wing pro-Israel group that was for years denied tax exempt status.

The group complained that its 2009 application for US tax-exempt status was being unduly scrutinized because of its connection to Israel. It was granted in 2016.

In a statement, the Justice Department did not detail the settlement, but said 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.”

The Justice Department statement also suggested, with veiled criticism, that Z Street’s positions on Israel might have been a factor in delaying its 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,” it said.

In a Wall Street Journal op-ed published Friday, Lori Lowenthal Marcus, a founder of Z Street, said the initial source of the lengthy review was an IRS list of countries where there may be fund-raising for terrorism, which, incomprehensibly, included Israel, and has now been changed.

The Trump administration has settled a number of cases brought by groups alleging that they were denied tax exempt status for political reasons during Obama's presidency. Audits in recent years by the office of inspector general for tax administration faulted the IRS for flagging groups based on little more than words in their names.

For an exclusive Arutz Sheva interview with Lowenthal-Marcus and the list of pro -Palestinian organizations granted tax-exempt status during the same period, see here.