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October 1, 2016 / 28 Elul, 5776

Posts Tagged ‘internal revenue service’

Leftwing J Street Going After Pro-Israel Regavim’s US Tax-Exempt Status

Friday, September 9th, 2016

Jeremy Ben-Ami, president of leftwing, anti-Netanyahu group J Street, sent an email to his group’s supporters announcing that he is pressuring the Obama Administration to revoke the US tax-exempt status of the Israeli (and pro-Israel) NGO Regavim in response to their supposed activity against the two-state solution.

The urgent need to harm Regavim’s US donations resulted from the effective work the group has done in forcing the Israeli authorities to apply Supreme Court rulings on demolishing illegal Arab construction in Area C of Judea and Samaria. One of the recent focal points of the Regavim efforts has been the squatter camp outside the Jewish community of Susiya, which the US and the EU insist must stay put despite the fact that its existence violates every signed agreement between Israel and the PA.

Ben-Ami wrote his followers that he was shocked to discover that the “settler movements” aiming to destroy Susiya are partially funded by donations from the US — including Regavim which has systematically mapped out the Susiya shacks and lean-tos, pointing Israeli police at the precise location of structures that violate the law. Ben-Ami sees this well-organized campaign to enforce the law as a threat to a future Palestinian State, which, he believes, must some day be handed the entire area.

Ben-Ami attributes to his organization’s work behind the scenes with the US State Dept. the fact that Prime Minister Netanyahu and Defense Minister Liberman have responded to international pressure and postponed the evacuation of the illegal Arab squatters until November 15.

The president of J Street shared in his email how enraged he is by the fact that groups that work against “the future of the State of Israel” and in direct defiance of US foreign policy and “perhaps” even US law, enjoy a tax-exempt status in the US, which is why J Street will continue to pressure the US government to revoke Regavim’s special status.

Should Ben-Ami be interested in learning what happened the last time the IRS has taken on a pro-Israel group, he should Google “Z Street,” a feisty organization headed by Jewish Press Online reporter Lori Lowenthal Marcus. As Lowenthal Marcus and others have reported over the past seven or so years, the IRS was “slow-rolling” discovery in lawsuits about how it slow-rolled applications by conservative non-profits in general and Z Street in particular.

In 2009, Z Street filed for 501(c)(3) status and was caught in the net of IRS targeting for groups that opposed Administration policy.

An IRS agent confirmed on the phone that Z Street’s application had been sent for special screening for groups connected with Israel. Z Street sued the IRS in 2010 for political discrimination that violated the First Amendment, and IRS Exempt Organizations Determinations Group manager Jon Waddell actually said in a December 2010 sworn declaration in federal court that the IRS flagged Z Street because “Israel is one of many Middle Eastern countries that have a ‘higher risk of terrorism.’”

“That’s hilarious,” wrote the Wall Street Journal last August, “since Z Street supports a country targeted by terrorism. But it also is untrue, which the Administration apparently knew before Mr. Waddell gave his statement to the court. In an October 25, 2010 internal IRS memo on the Z Street case produced in discovery, the IRS acknowledged that when Z Street’s application was being scrutinized Israel wasn’t on the list of terrorist countries, and that an agent may have been using an outdated list.”

If Jeremy Ben-Ami believes the Obama Administration is prepared to go after the tax-exempt status of yet another Zionist group — he should probably check with someone in the State Dept. Perhaps President Hillary Clinton would be inclined to alienate her Jewish voters and Israel by using the IRS for political purposes. It’s quite clear President Donald Trump won’t.

As to the self-congratulations of Ben-Ami on how he and J Street got the US and the EU to condemn Israel’s legal activities in Susiya — it stands to reason they knew all about it on their own. Why, the EU has been building illegal structures in Area C (which Regavim has successfully gotten demolished) without any help from J Street.

JNi.Media

Haredi Party Spearheading Effort to Protect Israeli Religious Charities from US Tax Authorities

Tuesday, June 7th, 2016

The heads of charity organizations in the ultra-Orthodox society, commonly known as Gemachim, received at least a temporary measure of relief from the Knesset Finance Committee, chaired by MK Moshe Gafni (UTJ), ahead of a new amendment of the Income Tax Act that takes effect in September and compels Israeli financial institutions to report through the local tax authorities on the Israeli financial affairs of US citizens. The amendment is the result of the Foreign Account Tax Compliance (FATCA) agreement between Israel and the US, which was a prerequisite for continued cooperation between Israeli and American financial institutions.

It’s not much, but MK Gafni demanded that the Finance Ministry and the Bank of Israel order the banks to give the Gemachim time until the end of June to resolve their status as public institutions, which he hopes would allow them to exclude themselves from the FATCA rules. Gafni envisions a tweaking of the amendment to exclude groups with deposits of less than $50 thousand, or holdings worth less than $50 million.

According to Chairman Gafni, the new regulations could bring the collapse of the Gemachim. “The Israeli government signed an agreement with the US government without considering the disastrous consequences for one of the most important enterprises of the Jewish people that has existed for millennia — the charity and mutual aid societies,” Gafni said, explaining that the Gemachim are “the only means at the disposal of a person under financial duress to receive an interest-free loan to get back on his feet.”

MK Israel Eichler (UTJ), Chairman of the Public Petitions, summoned Dr. Ilan Steiner, Director of the Bank of Israel Currency Department, to his committee hearing, to warn him against another aspect of the US attack on these charity institutions. According to Eichler, banks are being forced under pressure from foreign governments to close the accounts of Gemachim accounts, “in the name of ‘fighting terrorism’ and stopping money laundering, the IRS and the American government have become supervisors of all bank accounts around the world including in Israel. Everyone has to go through their inspection, so the Gemachim have received a letter that they will not be able to keep their bank accounts anymore.”

MK Eichler told Dr. Steiner: “I hope that the Bank of Israel find a way to abide by the agreements with the US while not mixing up the Gemachim with the war on terror. The banks must not become a burden and a restriction on associations and charity organizations who want to help people and do not engage in terrorism. There are limits to the madness of the banking system. We must not allow the charity organizations and Gemachim to be paralyzed by American pressures.”

The issues of compliance regarding money laundering and the war on terror stem from the side benefits of an IRS act that was intended to make sure US citizens who make money abroad share some of it with Uncle Sam. According to the IRS, FATCA targets tax non-compliance by US taxpayers with foreign accounts, focusing on individuals’ reporting about foreign financial accounts and offshore assets, as well as by foreign financial institutions about financial accounts held by US taxpayers or foreign entities in which US taxpayers hold a substantial ownership interest.

Using the US’ enormous economic clout, FATCA bullies the world’s financial institutions into reporting on their American clients to Uncle Sam. Under FATCA, to avoid being withheld upon, foreign financial institutions must register with the IRS and agree to report to the IRS about their US accounts, including accounts of foreign entities with a substantial US ownership. Foreign institutions that enter into an agreement with the IRS to report on their account holders may be required to withhold 30% on certain payments to foreign payees if such payees do not comply with FATCA.

Talk about working for the Yankee dollar.

According to The Marker, Gemachim stand to suffer three different ways from the new law: instead of permitting a Gemach to transfer money into their accounts, they could now be questioned regarding the source of the funds and whether or not tax was paid on them in the US; each deposit could be subject to harassment by the bank, in order to verify that it is not part of a money laundering scheme; and the Gemach could be saddled with a new definition as a financial institution, and as such would be compelled to report on its fund sources to the IRS or face criminal sanctions.

JNi.Media

Enough With the Gratuitous Israel-Bashing – Some Profs are Fighting Back

Wednesday, April 20th, 2016

Imagine this:  an organization called the American Studies Association, which was chartered by the Congress of the United States of America, and which is based in Washington, D.C., and which is composed of American scholars at American universities teaching American students about America, decided in 2013, that it should declare that it would – and all other U.S. academic institutions should – cease to deal with any Israeli academic institutions.

Got that?  Don’t you think a boycott of Israeli academics is what professors of American history, American culture, American literature should have as their organization’s mission? No?

If not, it turns out that four distinguished members of the ASA agree with you. And so does the organisation’s actual mission statement. That’s why those four members announced today that they are suing the ASA, charging that the blatant politicization of their academic association violates District of Columbia (D.C.) law governing nonprofit organizations.

“Until a handful of zealots hijacked our learned society, the ASA was the leading organization for the study of American culture,” stated Professor Simon Bronner, one of the plaintiffs. “Yet in 2013, in marched a handful of anti-Israel Boycott, Divestment and Sanctions (BDS) activists and suddenly ASA is an organization of social change pushing a narrow political agenda.”

According to the plaintiffs – all four of whom are professors who teach American Studies – the boycott adopted by ASA in December 2013 was a concerted effort by a small number of BDS activists, including founding members of the U.S. Campaign for the Academic and Cultural Boycott of Israel (USACBI), who used their leadership positions in ASA to make anti-Israel activism the central focus of the Association.

ASA’s stated mission – obviously and literally – has nothing to do with boycotting a foreign nation and thus the suit alleges its adoption violates the law that governs nonprofit corporations. These laws prevent organizations from engaging in activity that ignores its raison d’être, according to its own incorporating documents. An example: an organization created expressly as a charity to benefit the disabled cannot, because of these laws, take its donors’ money and decide it wants to instead promote fracking or protest animal cruelty.

The Complaint was brought against the people who are, or recently were, officers of the ASA, and who have used their positions to redirect the erstwhile scholarly organization.

In the allegations filed Wednesday, April 20, the plaintiffs explain:  “The Individual Defendants’ goals have nothing to do with the promotion of scholarship and everything to do with the advancement of their own political views, and their goal in hijacking the ASA is to use it to advance those views, not to advance the study of American culture.“

When the boycott was initiated, ASA’s constitution stated that “[t]he object of the association [is] the promotion of the study of American culture through the encouragement of research, teaching, publication…about American culture in all its diversity and complexity.”

The lawsuit charges that a boycott of another country is outside the scope of ASA’s charter and is the antithesis of promoting knowledge. ASA’s constitution goes on to say that ASA’s goal is “the strengthening of relations among persons and institutions in this country and abroad devoted to such studies.” According to the Complaint, the boycott does the exact opposite:  it affirmatively excludes an entire country and its academics.

In addition, as a tax-exempt nonprofit, ASA reports annually to the Internal Revenue Service. In its IRS documents, the Association continues to describe its mission as “the nation’s oldest and largest association devoted to the interdisciplinary study of American culture and history,” with its “exempt purpose – advancing the Study of American Culture.”  Plaintiffs allege that the academic boycott of Israel is clearly outside of this stated mission and purpose. Sounds right, doesn’t it?

Lori Lowenthal Marcus

US Senator Plans Lawsuit Over IRS Overseas Account Double Standard

Thursday, June 25th, 2015

A U.S. senator is challenging a double-standard regulation by the Internal Revenue Service and Treasury under which thousands of Americans living in Israel and elsewhere overseas are being forced to report their local Israeli finances in detail to the IRS.

It is information that would not be required by the government if the same U.S. citizens were living and working Stateside, Senator Rand Paul (R-KY) contends.

Paul plans to file a lawsuit against the U.S. Treasury and the IRS for denying his constitutional right to vote on the treaties that were unilaterally negotiated by the Obama administration with foreign governments over the regulations, The Washington Times reported Wednesday.

The treaties are referred to by the administration as “intergovernmental agreements.” The “U.S. Foreign Account Tax Compliance Act (FATCA) for improving global tax enforcement” requires banks in “dozens” of foreign countries to gather and share private financial information about millions of Americans living and working outside the U.S. – including those in Israel.

Tens of thousands who came on aliyah fall into this category, and have been warned by their banks they must fill out an annual IRS W-9 and “FBAR” (Foreign Bank Account Report.)

In an agreement reached between Israel’s Finance Ministry and the United States a year ago, the Israel Tax Authority will report the accounts of U.S. citizens in Israel to the IRS.

In exchange for the Israel Tax Authority’s obtaining information from local financial entities and sending it to the U.S. tax authorities, the IRS also agreed it “may” report on income in the accounts of Israelis in the United States.

“The U.S. sent a delegation here, which examined our systems and information security and was very impressed,” said Israel Tax Authority head Moshe Asher in a speech this week to the Society of Trust and Estate Practitioners (STEP.)

“We’ll soon be able to get information about Israelis with overseas accounts. In addition, the OECD has copied the U.S. by setting a standard called CRS, to which Israel is also committed. These standards are very similar to FATCA and we’ll join them by 2018.”

Hana Levi Julian

IRS Hacked, Info Stolen on 100,000 Taxpayers

Wednesday, May 27th, 2015

Chalk up another one for the IRS. In addition to refund delays, unnecessary audits and reams of ridiculous red tape, the government agency has just scored another consumer nightmare: its computer system was hacked, and the agency does not exactly know when.

Personal data belonging to tens of thousands of American taxpapers was stolen by the hackers, believed to part of an organized crime syndicate.

Congress was notified last week, ahead of releasing the information to the media, but stayed mum in order to allow investigators to open and pursue a criminal case.

Nevertheless — perhaps even unbelievably — Federal Tax Commissioner John Koskinen told reporters in a conference call on Tuesday, “This is not a security breach. Our basic information is secure.”

Legislators do not agree.

“That the IRS – home to highly sensitive information on every single American and every single company doing business here at home – was vulnerable to this attack is simply unacceptable,” said U.S. Senator Orrin G. Hatch (R-UT). Chairman of the Senate Finance Committee which oversees the IRS, Hatch told reporters the agency has been warned repeatedly to do more to protect taxpayers, but “fell short.”

According to the commissioner, the hackers exploited the recently developed ’Get Transcript’ application to access tax returns of taxpayers going back five years or more.

The app was praised in 2014 as part of President Barack Obama’s initiative to streamline the government. At the time, the IRS insisted it was taking strong security steps to backup the app, which used the kind of information requested and stored by credit ratings bureaus.

Out of some 200,000 attempts to access individual records, said Koskinen, the hackers succeeded 104,000 times.

In order to cover their tracks, they filed fraudulent returns, although it appears they only managed to submit some 15,000 or so.

But the breach wasn’t even noticed until mid-May; it was only picked up when IRS workers picked up odd Internet activity from the tax filing season.

Hana Levi Julian

US Orchestrated Anti-Bibi Bomb May Bite its Backers

Monday, March 16th, 2015

Remember Al Capone?

He was the notorious American gangster who met his downfall by the inelegant and unexciting – but sometimes deadly – U.S. tax code. So, too, may be the ultimate fate of the ubiquitous and well-funded Obama-style campaign machine gunning for Netanyahu, known as V15.

That entity and its creators are barred under US tax law from attempting to achieve its two stated goals: defeating Israeli Prime Minister Netanyahu and changing Israeli law in order to create a Palestinian State.

For some reason the fact that V15 is an avowed effort to oust Netanyahu did not raise enough eyebrows when it was first announced.

The lack of sustained attention back in January caused some to scratch their heads. That V15 was run by the same folks, and in the same style, as U.S. President Barack Obama’s notorious street theater, in your face, take no prisoners-style campaign director, Jeremy Bird; that its financial, emotional and political source received hundreds of thousands of dollars from the U.S. State Department; and even though that same source is an entity which has tax exempt status in the U.S. – which means it cannot fund projects to either support or defeat a political candidate in the U.S. or anywhere else, did not lead to a long media shelf life.

The first two issues should have drawn attention to V15 not because political operatives are barred from selling their strategic skills – that is, after all, the nature of their job – but because it was so odd for someone like Bird to come all the way to Israel to sell his skills. Bird is not Jewish, and his only apparent connection to Israel was working for an anti-Israel American radical activist back in his graduate days.

But who was paying for Bird? Campaign funding is very strictly regulated in Israel. The strategist who managed Obama’s two U.S. presidential campaigns – in which billions of dollars were spent – was likely to have a very high price tag.

Then there was the matter of the U.S. State Department grants to OneVoice, V15’s “creator.” The airy dismissal that all State Department funding ended at the end of November, so there was no U.S. government money being used for the election — which was publicly announced in early December — was, incredibly, accepted without any further interrogation by the American (and most of the Israeli) press corps. Former Naval Intelligence officer J.E. Dyer  pursues that angle with the kind of tenacity one should be able to expect from the seasoned press corps members who show up nearly every day at State Dept. briefings.

But the least interesting angle, at least to most, is the one that involves the Internal Revenue Service. Before your eyes glaze over, recall that the U.S. actually had what could almost be called a juicy scandal beginning nearly two years ago, that involved the IRS.

Quite a few politically conservative (and one pro-Israel) organizations claimed that the IRS was treating their applications for tax-exempt status in a discriminatory fashion. The initial response from the IRS was that many of those groups were not really entitled to tax-exempt status, because they were engaged in political, not educational or charitable, work.

That seemed to many like a reasonable response. The Internal Revenue Code states that even a non-profit organization cannot be exempt from paying taxes, and its donors will not be entitled to tax deductions, if the organization is involved in politics or lobbying.

But while much of the IRSGate attention has since focused on where are Lois Lerner’s emails and whether they are really gone forever or just deleted, hidden or irrelevant, the fact that tax-exempt organizations cannot engage in raw politics seemed to be one tiny aspect of American government that many people learned.

Lori Lowenthal Marcus

IRS fears Disclosure Above All Else, Offer Made in Court Confirms

Monday, July 22nd, 2013

On Friday, July 19, in federal district court in Washington, D.C., Department of Justice lawyers who have the misfortune of having to represent the Internal Revenue Service were forced to reveal exactly how desperate the IRS is to keep its deep, dark secrets buried.

The hearing was held to determine whether the IRS would succeed in convincing the court to dismiss Z STREET’s lawsuit for viewpoint discrimination, before any of the claims alleged by Z STREET can be examined.

It is critical for the IRS to succeed at this stage of litigation, because if it does, Z STREET will be barred from finding out whether the IRS acted in an unconstitutional manner in setting aside its application for tax exempt status.  If the IRS succeeds at this stage, no questions will be permitted into how it is that, according to documents produced by the IRS, the application for tax exempt status of an organization with a viewpoint about Israel which differs from this administration’s was pulled aside for extra scrutiny.

Over the course of more than an hour, and despite federal Judge Ketanji Brown Jackson’s  increasingly apparent frustration with the shifting legal positions of the IRS, the DoJ lawyer said two things that should make everyone who is following the IRS scandals raise their eyebrows right through their hairlines.

ONLY YES OR NO TO EXEMPTION, NOT HOW OR WHY

The IRS has repeatedly sought to characterize Z STREET’s claim as one brought under Section 7824 of the Internal Revenue Code, which requires applicants to wait 270 days after filing their tax exemption application before going to court and asking it to make a determination where the IRS had thus far failed to do so.  And each time the IRS set up what it insisted was Z STREET’s claim, it then pointed out that Z STREET did not wait long enough to bring such a claim, and therefore Z STREET’s suit had to be dismissed.

Z STREET filed its lawsuit against the IRS 239 days after filing for its tax exempt status.  Had Z STREET’s lawsuit  been brought in order to obtain a determination about its tax exemption status – an approval or a denial – the IRS would have been correct in seeking to have the pro-Israel organization’s lawsuit dismissed.  But the IRS is the only litigant who ever raised Section 7824 in the course of the litigation, not Z STREET, the party which filed suit.

Despite that track record, in court on Friday, the IRS offered to waive this statutory requirement – if only Z STREET would abandon its effort to find out what the IRS’s policy about such applications has actually been.

How nice.  Except Z STREET did not bring this lawsuit as a way to find out if its application for tax exempt status was accepted or denied.

As Alana Goodman of the Washington Free Beacon observed from her seat in the court room on July 19, the judge finally lost her temper in response to the repeated insistence by the IRS that Z STREET already had a remedy, the Section 7824 proceeding, to determine whether it was entitled to tax exempt status.  As Goodman wrote:  “”That’s not what they want,’ Judge Jackson snapped.”

This insistence by the IRS that Z STREET had a remedy for its legal claim: it could be assured that the court would provide it with a constitutionally valid process and given an up or down decision pursuant to a Section 7824 ruling, ultimately brought the judge to ask the Justice Department lawyer a critical question.  She asked whether, in the opinion of the IRS, there is any way for Z STREET to obtain the relief that it – not the IRS’s mischaracterization of its claim –  has repeatedly stated in every court filing it wants. In other words, can Z STREET find out whether the IRS violated its constitutional rights by treating its application differently on the basis of its viewpoint.

No, according to the IRS, it can’t.

In other words, the IRS says you can get the little ticket that comes out of the black box called “IRS Tax Exempt Determinations,” which will say either “approved” or “denied,” but you cannot, no way, no how, lift the lid off that black box and look inside.

But looking inside that black box is precisely what Z STREET wants.  It is the only way to determine whether the IRS violated the constitutional rights of Z STREET and of any other organization which complains, at any time, of a discriminatory process employed by the IRS in making its determinations.

Judge Brown asked Z STREET’s lawyer, Jerome M. Marcus, whether the organization could use the Freedom of Information Act to get at the information it is seeking in its lawsuit.

Marcus pointed out that route would not be productive. There are numerous FOIA exceptions which the IRS would certainly use as a shield to prevent the black box from being opened. FOIA is not an option.

Nope, it’s either a court which will allow citizens who believe their constitutional rights have been violated by the IRS to provide the mechanism to find out, or the IRS will be, as so many Americans already believe it to be, a rogue agency able to act with impunity, and able to invoke immunity from prying eyes.

So it comes down to this: Z STREET has alleged that the IRS employed a constitutionally tainted process to evaluate certain applicants for tax exempt status, while the IRS’s position is that there is no way for any complainant to inquire about that process.

IRS INSISTS A “GOOD ENOUGH” REMEDY IS ADEQUATE EVEN FOR UNCONSTITUTIONAL GOVERNTMENT ACTS

The second thing the IRS did, through its DOJ lawyers, was insist that Z STREET should not be and will not be able to get the relief they want. An organization – in this case, Z STREET, but it would apply to any organization – claiming the IRS violated its Constitutional rights should be satisfied with a “good enough” remedy – “not perfect,” but good enough.

That this is the IRS position came through in the gentle – mostly – probing from Judge Jackson, who understood that the IRS desperately wants to prevent Z STREET from looking inside its black box.

Judge Jackson understood that what Z STREET wants, and the reason it filed its lawsuit in August, 2010, is to find out whether, as it believes, the IRS discriminated against the pro-Israel organization because of its political position.  And the only way to find out whether that is the case is not to merely wait and see whether it is approved or denied the opportunity to be a tax exempt non-profit corporation.  The only way to make that determination is to open up the black box of the IRS Exempt Organizations Determinations unit and look inside, and see whether the process the IRS used was a constitutionally valid one or an invalid one.

Marcus explained: “if the IRS was sending applicants with blue eyes to wait behind Door Number One, through which they will pass without any delay, but the IRS was sending applicants with green eyes to wait behind Door Number Two, where what awaits them is a different, and more lengthy examination, then the minute Green Eyes are sent to wait behind Door Number Two is the moment a constitutional violation occurs.”

“And the moment that constitutional violation occurs and the Green Eyes become aware that they were sent someplace different, and were subject to a process more onerous than were the Blue Eyes, is the moment they have been discriminated against and, therefore, the time to raise that constitutional claim in court.”

The position of the IRS is one that means no one can ever find out if the IRS acted in an unconstitutional manner, all they can do is find out whether they can get, or be denied, tax exempt status.  That would put the IRS above the Constitution.  That cannot be right.

Judge Jackson will take the court filings and the arguments raised in court on July 19, under advisement.  There is no timetable for when she will rule.

Full Disclosure: This reporter is the president of Z STREET

Lori Lowenthal Marcus

Printed from: http://www.jewishpress.com/news/irs-fears-disclosure-above-all-else-offer-made-in-court-confirms/2013/07/22/

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