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August 28, 2014 / 2 Elul, 5774
At a Glance

Posts Tagged ‘Z Street’

Courts Open Window on the IRS’s Political Litmus Tests

Friday, May 30th, 2014

Interest in the Internal Revenue Service’s outrageous practice of subjecting politically conservative groups to discriminatory treatment has died down a bit since the revelations about this scandal first hit the news a year ago. But a court decision that was handed down earlier this week about a similar instance of potential government misconduct may shed more light on the way the Tea Party and other right-wing organizations were given the business by Lois Lerner and the rest of what appears to be a highly politicized bureaucracy at the heart of our tax collection system.

On Tuesday, Federal Judge Ketanje Brown Jackson issued the first substantive ruling in any suit that challenged the IRS’s pose of political neutrality under the Obama administration. The case concerns Z Street, a Philadelphia area-based pro-Israel organization that filed for tax-exempt status in December 2009 because of its role in educating the public about Israel and the Middle East conflict. The group’s founder Lori Lowenthal Marcus wrote in the Jewish Press this week about what followed:

On July 19, 2010, when counsel for Z STREET spoke with the IRS agent to whom the organization’s application had been assigned, that agent said that a determination on Z STREET’s application may be further delayed because the IRS gave “special scrutiny” to organizations connected to Israel and especially to those whose views “contradict those of the administration’s.”

Z Street subsequently sued the government and rightly argued that its constitutional rights had been violated because of the “viewpoint discrimination” that the IRS agent had openly displayed. Now after years of delays, Judge Jackson has ruled that by asserting that Z Street had no right to sue, the government had tried to “transform a lawsuit that clearly challenges the constitutionality of the process … into a dispute over tax liability.” She similarly dismissed the government’s claims of sovereign immunity.

What has this got to do with the Tea Party and its complaints? Plenty.

As the Wall Street Journal editorial page noted yesterday:

This ruling will force the IRS to open its books on the procedures it used and decisions it made reviewing Z Street’s tax-exempt application, procedures it has tried to keep shrouded. As the case proceeds, Z Street’s attorneys can seek depositions from many who have been part of the larger attempt to sit on similar applications by other conservative groups.

In other words, this case may be the straw that breaks the camel’s back of the IRS’s politically prejudicial policies. If an IRS agent can reject or stall a pro-Israel group’s application on the grounds that “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,” then no group, no matter what its political orientation or cause is safe from being subjected to a political litmus test designed by any administration of either political party.

Z Street’s Marcus deserves praise for having the guts to persist in her challenge to the government for years even though the media had little interest in publicizing what appeared to be an outrageous example of how the IRS had become politicized under the Obama presidency. Last year Marcus learned she wasn’t alone when the news about the Tea Party broke. Now, as her legal process unfolds, Americans may get a better idea about how broken the system has become.

Using the IRS to punish political foes is blatantly illegal. If, as we suspect, the Z Street case reveals the sort of internal email traffic that will reveal how widespread this practice has become in the last five years, perhaps even a liberal mainstream press that still thinks the problems at the IRS are a “phony scandal” will start to pay attention.

IRS Political Discrimination Suit by Pro-Israel Group OKed by Court

Tuesday, May 27th, 2014

After nearly four years of litigation, a U.S. federal district court judge instructed the Internal Revenue Service to cease “struggl[ing mightly]” to thwart a lawsuit filed by the pro-Israel organization Z STREET. That lawsuit alleges the IRS violated Z STREET’s First Amendment Constitutional rights. The judge ordered the IRS to file a substantive answer to Z STREET’s Complaint within 30 days.

Z STREET* sought tax-exempt status as a non-profit organization engaged in educating the public about Israel and the Middle East conflict. The organization filed its application in December of 2009.

On July 19, 2010, when counsel for Z STREET spoke with the IRS agent to whom the organization’s application had been assigned, that agent said that a determination on Z STREET’s application may be further delayed because the IRS gave “special scrutiny” to organizations connected to Israel and especially to those whose views “contradict those of the administration’s.”

That statement by the IRS agent, according to the Z STREET board, constituted a clear violation of the Constitution. The government may not treat an organization or person differently because of that person or organization’s political viewpoint. Such action by a government entity constitutes what is known as “viewpoint discrimination.”

Z STREET filed a lawsuit against the IRS alleging that its Constitutional rights had been violated. That lawsuit, Z STREET v. Schulman, IRS Commissioner (now Koskinen) has finally obtained its first substantive ruling.

Several years after Z STREET challenged the IRS in court, several tea party and other conservative groups also claimed the IRS had discriminated against them on the basis of their political viewpoint. On May 10 of last year, the floodgates of criticism burst open when then Director of the IRS Exempt Organizations Division Lois Lerner admitted that the IRS had engaged in certain activity that disadvantaged conservative groups. Lerner referred to that activity at the time as “absolutely inappropriate.”

The ruling in the Z STREET case by Judge Ketanje Brown Jackson on Tuesday, May 27, is the first substantive ruling by a judge in any action brought challenging the political impartiality of the IRS under the current administration.

Judge Jackson summarily rejected the three grounds raised by the government in its effort to thwart Z STREET’s day in court. The first two she rejected because she refused to accept the IRS position that Z STREET was simply complaining about the fact that its application had not been granted.

Defendant struggles mightily to transform a lawsuit that clearly challenges the constitutionality of the process that the IRS allegedly employs when it determines the tax exempt status of certain organizations into a dispute over tax liability as a means of attempting to thwart this action’s advancement.

The judge rejected the third defense – one of sovereign immunity – raised by the IRS by pointing out that the government may not claim it is immune from claims that it is acting unconstitutionally. Indeed, that is the basis for the Bill of Rights.

The IRS must file a substantive response to Z STREET’s Complaint by June 26, 2014.

Since the time the lawsuit was filed, IRS documents were released by a U.S. congressman which essentially confirm Z STREET’s claims and suggest that the IRS agents filed documents with the court that were not truthful.

*The author of this article is the president of Z STREET.

FOIA Request: Did IRS Maliciously Audit Pro-Israel Organization?

Thursday, February 27th, 2014

Once again the alleged politicization of the Internal Revenue Service under the current U.S. administration is in the news.

Most of the attention, certainly by those in Washington, D.C., has been on politically conservative organizations such as Tea Party  groups, which claim discriminatory treatment at the hands of the IRS. However, a certain and very specific slice of pro-Israel non-profit organizations have also claimed victimization at the hands of the IRS.

On Wednesday, February 26, legal representatives for HaYovel, filed several Freedom of Information Act requests. HaYovel is a Nashville-based tax-exempt organization which provides volunteers to work in Jewish-owned vineyards in Judea and Samaria.

The FOIA requests were directed to the IRS, the Treasury Department and the State Department, and seek information relating to an oddly-timed and allegedly politically motivated audit by the IRS. The audit came in December, 2010, a few months after the organization was featured prominently in a July 5, 2010 New York Times article titled Tax-Exempt Funds Aid Settlements in West Bank.

The FOIA requests seek to determine whether there is a connection between the New York Times article, the current administration’s policies with regard to Israel’s settlements in the West Bank, and the 2010 HaYovel audit. There were four other non-profit, tax-exempt pro-Israel organizations which claim to also have received surprising audits shortly after the New York Times article raised the issue of whether U.S. charities which support entities beyond the 1949 Armistice Line (the so-called Green Line) should be entitled to tax-exempt status. The other four have refused to be publicly identified for fear of further alleged retribution by the IRS.

Those five pro-Israel organizations which were subject to allegedly maliciously-motivated audits, and a sixth one, which experienced a different form of treatment it claims violated its constitutional rights, are pro-Israel organizations which recognize and support Jews living in Judea and Samaria, popularly referred to as the “West Bank.”

Unlike many other pro-Israel organizations, and nearly all pro-Palestinian Arab organizations, those six support the right of all people to live in that territory, whether Jewish, Muslim or Christian. And that is the reason the New York Times article was critical of the organizations it named, and similarly situated ones.

The sixth pro-Israel organization which claimed discriminatory treatment by the IRS is Z STREET.* That organization is in a different situation than the others. That is because, as a brand new organization, it had only filed for tax-exempt status with the IRS in December, 2009, and its file was just being reviewed by the IRS agent to whom its file had been assigned, when the July, 2010 New York Times article was published.

Of course the New York Times is not empowered to direct activity by any branch of government, but pundits and others wondered whether the article did influence IRS activity.

Z STREET brought a lawsuit against the IRS in August of 2010, seeking to find out why its application was given “special scrutiny,” and to have the court order that its tax-exempt application be given a constitutionally untainted review.

It is the request for mandated action by the IRS (an untainted review of its request for tax exemption) that prevents a FOIA request from granting relief to Z STREET, unlike the other groups which already had received tax-exempt status.

The law firms which filed the FOIA requests for HaYovel are the Liberty Institute and the Washington, D.C. law firm Bancroft PLLC.

*The author of this article founded and was the president of Z STREET.

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

IRS in Court Friday, its Documents Prove Z STREET’s Claims

Friday, July 19th, 2013

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.

IRS: We Targeted Supporters of Israel’s Disputed Territories

Tuesday, June 25th, 2013

Ever since the beginning of the scandal concerning the United States Internal Revenue Service and the claims that it had a policy of treating differently – as in worse – organizations seeking tax exemptions if those organizations held positions in conflict with this US administration, there have been doubters.

And, of course, the way the story has been spun fans the flames of doubt – yes, the IRS finally admitted, after years of denial, that it had targeted certain groups and subject some groups to extra scrutiny, but there was no political impetus for the inappropriate action, there was just poor oversight of overworked civil service employees who were just trying to streamline their jobs.  Heck, the claim went, that was wrong, but what we now recognize as inappropriate actions weren’t taken for political purposes. That was the claim.

The IRS is trying desperately to make glib admissions, have some heads roll, even parade some of those heads around to show how seriously the IRS takes its need to be punished.  But now, it’s time to move on.  The IRS is even providing a kind of amnesty for many of the politically conservative groups that complained – they are getting hand-delivered approval letters, and future applicants will be assured of an easier time going forward.

So, maybe it is time to move on?

Well, one little organization (the one this reporter founded and of which she is the president) refuses to go flying no matter how hard the IRS is shaking its leg to free itself.

Z STREET claimed when it filed its lawsuit for viewpoint discrimination against the IRS in August, 2010, that the IRS treated Z STREET differently subjecting it to additional scrutiny, because of its ideological views.

Two things happened on Monday, June 24, that proved, finally, that Z STREET – and others similarly situated – was correct.

First, the IRS released its 83 page document, “Charting a Path Forward at the IRS,” in response to the Treasury Department’s Inspector General who found that the IRS had engaged in inappropriate targeting of certain groups which had sought tax exempt status from the IRS.

The IRS Path Report begins:

The IRS used inappropriate criteria that identified for review Tea Party and other organizations applying for tax-exempt status based upon their names or policy positions instead of indications of potential political campaign intervention.

Well, there you have it.  The IRS admitted that it made decisions based on policy positions, rather than on prohibited activity.  That is exactly what Z STREET claimed – that it had been discriminated against because it holds positions that “contradict the Administration’s public policies.”

The second revelation was one made by Bloomberg News.  That media agency obtained IRS documents revealing that, in addition to the terms Tea Party and 9/12, other terms were used in flagging organizations seeking tax exempt status for additional scrutiny.  While the headline of the article, and what was the object of most media attention, was that terms that suggested not just conservative groups, but also liberal or progressive groups were given the IRS evil eye – words such as “occupy” and “progressive” were allegedly triggers, as was the word “Israel.”

But far down in a long article the Bloomberg reporter explains that, “Disputed Territories” was considered problematic.  To wit:

‘Disputed Territories”

The November, 2010 [BOLO - Be On the Look Out] list also has terms that could be related to Israel, looking for applications that ‘deal with disputed territories in the Middle East’ and ‘may be inflammatory.’

Well, golly!  What kind of a group calls a particular area of land “disputed territories,” which the vast majority of people, either for ideological or simply conformity refer to as the “West Bank?”  Yes, that would be strong Zionist groups such as Z STREET.

That the IRS chose to handle Z STREET’s application in a particular way on the basis of our organization’s position on this issue, and the fact that someone within the IRS even took the time to think such a position might ‘be inflammatory,’ is about as close as can be to a smoking gun revealing the IRS engaged in naked viewpoint discrimination.

That foul activity cannot be waved away.  Its stench is one that will only dissipate after there is a thorough investigation into how the  decision was made to use this particular criterion for evaluating an application.  Who approved that decision?  How many people knew about it?  How many organizations were subjected to it?

US Treasury Openly Fighting Settlements, Pro-Israel Groups (Video)

Wednesday, May 29th, 2013

Did the IRS also target tax-exempt groups that opposed Administration policy priorities? The Wall Street Journal on Tuesday mentioned the case of Z Street, a Pennsylvania pro-Israel group whose president is none other than The Jewish Press’ Lori Lowenthal Marcus.

Z Street (you get the idea behind the name, right? Z for Zionist versus J Street for Jews who hate Zionism) filed for 501(c)(3) status in December 2009, as an educational group. According to Lori, their tax attorney called the IRS in July 2010 to find out why it was taking so long to receive the status, and the IRS auditor on the case, Diane Gentry, said the application was taking so long because auditors were supposed to give special scrutiny to groups “connected with Israel.”

Folks, this is nightmare territory, except, it turns out, all your nightmares have been real. The U.S. may declare its friendship to “the Jewish State” night and day, but when it comes down to the reality of tax exemptions, you’ll get a better treatment if you’re associated with Hamas than with right-wing issues in Israel.

Lori told the WSJ that Gentry, the auditor, explained that many applications related to Israel had to be sent to “a special unit in D.C. to determine whether the organization’s activities contradict the Administration’s public policies.”

This is Venezuelan style democracy, folks. And the fact that the IRS auditor was citing it mater-of-fact like, suggests it was actual policy, and, as such, a blatant violation of every known democratic principle.

Z Street filed suit in August 2010 in federal court in Pennsylvania on the grounds of “viewpoint discrimination,” and its case has since been moved to Washington, D.C.

The WSJ cites a New York Times article published July 2010, that stated: “Tax-exempt groups were donating to West Bank settlers, and State Department officials wanted the settlers out.”

“As the American government seeks to end the four-decade Jewish settlement enterprise and foster a Palestinian state in the West Bank,” the NYT wrote, “the American Treasury helps sustain the settlements through tax breaks on donations to support them.”

The hearing of the Z Street case is scheduled for July 2, in Washington DC. Bring your placards!

Below are two of Lori’s TV appearances, most recently with Newsmax’s Steve Malzberg, and a few days earlier with Fox News’ Greta Van Susteren.




Printed from: http://www.jewishpress.com/news/breaking-news/us-treasury-openly-fighting-settlements-pro-israel-groups-video/2013/05/29/

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