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October 20, 2014 / 26 Tishri, 5775
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IRS in Court Friday, its Documents Prove Z STREET’s Claims

The first court hearing for the IRS since the scandal began is this Friday. IRS documents released by congress should constitute admissions by the IRS proving the pro-Israel organization's claim that the IRS engaged in viewpoint discrimination.
The pro-Israel group Z STREET goes against the IRS in federal d.ct. in Washington, D.C. on July 19

The pro-Israel group Z STREET goes against the IRS in federal d.ct. in Washington, D.C. on July 19

The more evidence is revealed regarding the Internal Revenue Service’s treatment of organizations whose ideological views conflict with those of this Administration’s, the more it becomes apparent that the claims made against the IRS by a small pro-Israel non-profit back in August, 2010 were not only probably true, but are demonstrably true.  Incredibly, the proof that Z STREET’s claims are true was found in documents created by the IRS itself, in submissions to investigators looking into IRS misbehavior regarding other non-profits.

And on Friday, July 19, as the IRS makes its first court hearing in any case regarding claims that it mistreated many non-profits because of the ideological positions of those organizations, the proof of its ideological motivations are now public.

This Friday, July 19, at 10:00 a.m., Judge Ketanji Brown Jackson will hear the government’s motion to dismiss Z STREET’s claims against it in courtroom 17 in the Federal district court in Washington, D.C.

In a federal lawsuit filed in August, 2010, Z STREET claimed that the IRS had engaged in viewpoint discrimination while processing Z STREET’s application for status as non-profit.  The basis for its claim was that the IRS agent assigned to Z TREET’s file told Z STREET’s corporate counsel that the review of Z STREET’s application for tax exempt status would take a long time because the IRS had to “give special scrutiny to organizations connected to Israel,” and that the files of some of those organizations “were sent to a special unit in Washington, D.C. to determine whether the organization’s activity’s contradict the public policy of the Administration.”

This Wednesday, July 17, Z STREET (this reporter is the president of the organization) filed a supplemental memorandum with the court, submitting newly-discovered evidence that the IRS employees created a purely political category “Occupied Territory Advocacy” as the basis for additional review of an organization’s application for tax exempt status.

All of the information about this IRS categorization is contained in documents which the IRS had been required to submit during an investigation conducted by the Treasury Department’s Inspector General for Tax Affairs.  But these documents had not been made public earlier, because the IG’s mandate had been to look at organization’s whose applications were delayed on the basis of political orientation, the largest example being the Tea Party organizations.

However, on June 24, Rep. Sander Levin, (D-MICH), released a series of documents produced by the Internal Revenue Service.  Rep. Levin said he believed these materials proved the IRS had not only targeted conservative groups, but that it had also gone after “progressive” groups, i.e. liberal ones. Presumably, his goal was to prove that the IRS was not selective in its misbehavior, but had been an equal opportunity offender.  Levin believed that the 14 IRS documents which he released on June 24, 2013, made this point, and he then went on the offensive, lambasting the Treasury’s Inspector General, J. Russell George, for failing to raise this “fact” in his report.

Sympathetic media outlets immediately ran top-of-the fold headlines proclaiming, based upon statements made in a conference call given by Danny Werfel, the new Acting IRS Commissioner, with select members of the media, that the IRS had not only used the words “Tea Party” as a search term to target organizations for additional scrutiny, but that it had also targeted “progressives,” “Israel” and “Occupy.” Outlets which ran with this story, and used the claim in its headlines, included the Associated Press, Bloomberg News, and the Huffington Post.

But a detailed review of the IRS documents released by Levin, as well as a lengthy response by the Inspector General to Levin’s scathing letter, revealed that those documents did not prove what Levin and others hoped was being proved. In fact they proved something very different.

Although the term “progressives” was found as a category on several of the documents, just a few minutes’ perusal of that line item reveals that nothing was done with the organizations with that term in their title.  In fact, the Tab under which that term appears is “Potential Abusive Historical,” and the category had been moribund.  A note in one of the columns revealed that because those organizations were clearly engaged in political activity, IRS employees noted that they should have requested a 501(c)(4) and not the 501(c)(3) designation they sought.

STAUNCHLY PRO-ISRAEL ORGANIZATION WAS SENT FOR ADDITIONAL REVIEW

But the 14 IRS documents do reveal, and they do it categorically, and they constitute an admission on the part of the IRS, that the Service was looking at certain “Israel connected” organizations and making a distinction based upon the organization’s political/ideological viewpoint.  And that is the very claim made by Z STREET in its lawsuit brought against the IRS in August, 2010, and in which there is a hearing in federal district court in Washington, D.C. this Friday.

On Wednesday, July 17, a document was filed with the D.C. District Court, the Motion of Plaintiff Z STREET to Supplement the Record to Include Documents Recently Released by Defendant Internal Revenue Service.  Several of the points made in that document are:

UNDER OATH, IRS MANAGER SAID Z STREET’S APPLICATION DELAYED DUE TO TERROR FUNDING CONCERNS

  • The Manager of the IRS Touch and Go (“TAG”) Group stated under oath, after Z STREET brought its lawsuit against the IRS for viewpoint discrimination, that he concluded, based upon Z STREET’s application for tax exempt status and other submissions that Z STREET’s file should be sent to the TAG Group, #7830.
  • The TAG Group manager based his decision upon his view that Z STREET might be engaged in the funding of terrorism because “there is a higher risk of terrorism in Israel.”

NO ORGANIZATIONS SENT FOR ADDITIONAL SCRUTINY BECAUSE OF TERROR CONCERNS

  • Nowhere in any of the 14 documents is any organization’s application referred to any group for anything related to the potential funding of terrorism.
  • Nowhere in any of the 14 documents is there even any mention of terrorism.

IRS CREATED AN IDEOLOGICAL CATEGORY: “OCCUPIED TERRITORY ADVOCACY”

  • The 14 IRS documents released by the House Ways and Means Committee contained a category, created by IRS employees, entitled “Occupied Territory Advocacy.”
  • The category for “Occupied Territory Advocacy” had only one organization referred to it, and the notice to IRS inspectors to “Be on the Look Out” for groups under this category was sent on August 10, 2010, just days after Z STREET’s file was reviewed, and a determination was made to send the file to the TAG Group, according to IRS statements.
  • The sole entity in the “Occupied Territory Advocacy” category was referred to TAG Group #7830, which is where Z STREET’s file was sent, according to IRS statements.
  • The “Occupied Territory Advocacy” category appeared on the August 12, 2010, the November 9, 2010 and the November 16, 2010 IRS documents released on June 24, but it was not present in the next document, dated February 2, 2011, or any of the subsequent 10 IRS documents.
  • Z STREET’s application was “put on hold” by the IRS because it brought its lawsuit against the Service, as the IRS explained in a court filing in January, 2011.  Once Z STREET’s application was no longer under consideration, the category disappeared.
  • The creation of a category for a purely ideological viewpoint is a violation of the IRS mandate, and its use to make decisions about whether to approve or deny tax exempt status on the basis of an applicant’s viewpoint is unconstitutional.

The IRS attorneys at the Justice Department opposed Z STREET’s submission of its memorandum containing the recently released IRS documents, which is not surprising.

Whether the judge will take into consideration the written admissions of the IRS that it treated Z STREET’s application for tax exempt status differently because of the ideological viewpoints held by Z STREET will be revealed in court. And whether the IRS will be subject to any consequences for its misbehavior – its unconstitutional behavior – as some non-profits claim, remains to be seen.

About the Author: Lori Lowenthal Marcus is the US correspondent for The Jewish Press. She is a recovered lawyer who previously practiced First Amendment law and taught in Philadelphia-area graduate and law schools.


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3 Responses to “IRS in Court Friday, its Documents Prove Z STREET’s Claims”

  1. Christopher Lee says:

    Let the facts come out.

    Chris
    Owner Cel Financial Services.
    IRS Registered Tax Return Preparer.
    Registered bonded California CTEC Tax Preparer.
    Please visit my website for all your Fillmore Income Tax needs.
    http://www.taxprepfillmore.com/

  2. Re. Lori Lowenthal Marcus: what is a "recovered lawyer"?

  3. Gil Gilman says:

    I'll be keeping up with the developments.

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