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Are You Now or Have You Ever Been a Zionist?

We know that the Obama administration has been far from friendly to Israel — but is this sentiment now influencing policy at the IRS?

The Jewish group Z Street, which claims that its request for tax-exempt status was delayed by the IRS because of its support Israel, has been engulfed in a legal battle with the government agency for months. The case heated up last week after the organization introduced a letter that appeared to show an IRS agent giving unusual scrutiny to another Jewish group that had also applied for 501(c)3 status. Among the questions asked by the agent: “Does your organization support the existence of the land of Israel?”

Z Street said that this is further evidence that the IRS has started targeting pro-Israel groups. Ben Smith at Politico has the details of the letter:

A Pennsylvania Jewish group that has claimed the Internal Revenue Service is targeting pro-Israel groups introduced in federal court today a letter from an IRS agent to another,  unnamed organization that tax experts said was likely outside the usual or appropriate scope of an IRS inquiry.

“Does your organization support the existence of the land of Israel?” IRS agent Tracy Dornette wrote the organization, according to this week’s court filing, as part of its consideration of the organizations application for tax exempt status. “Describe your organization’s religious belief system toward the land of Israel.”

But are these inquiries simply inappropriate, or are they evidence of an official campaign against Zionist organizations? A couple of tax attorneys consulted by Smith said they found the questions to be out of line:

“The claims go far beyond what should be the IRS’s role,” said Paul Caron a University of Cincinnati law professor and the author of TaxProf Blog.

Ellen Aprill, a law professor at Loyola University in Los Angeles said the second question was “appropriate” in the context of an application seeking a tax exemption on religious grounds.

“The first one is not the way I would want any of my agents to do it,” she said.

Some have wondered why Z Street is waging a public fight against the IRS instead of handling the tax issue privately. But Z Street founder Lori Lowenthal Marcus told me that her main worry here isn’t her own group’s tax-exempt status — it’s whether the government is holding pro-Israel groups to an unfair standard.

“My concern is that people are sort of veering off into tax world instead of Constitutional law,” said Lowenthal Marcus, a former constitutional lawyer, who added that she believes the actions of the IRS could constitute a First Amendment violation.

But apart from Z Street and the unnamed Jewish group mentioned in the letter, other organizations have yet to step up with claims that they were treated unfairly by the IRS.

Lowenthal Marcus said this doesn’t surprise her and noted that taking on the IRS can be an intimidating task. “Who’s going to challenge them?” she asked.

The current evidence is hardly enough to prove that there has been an official change in IRS policy toward pro-Israel groups, but the letter produced by Z Street shows that the case definitely deserves further inquiry. There is precedent for the IRS denying tax-exempt status to groups that clash with the government’s official policy — the Bob Jones University case is the most prominent example. But while the Obama administration has certainly taken an unfriendly stance toward Israel, this position could hardly be characterized as “official” government policy.

Ron Radosh at Pajamas Media also argues that this issue warrants a public investigation and suggests that this might be the task for a Republican-chaired House Oversight Committee: “What must now be publicly investigated — more work, perhaps, for Rep. Darrell Issa,  likely the new chairman of the House Oversight and Government Reform Committee — is, as Z Street put it, whether or not the IRS is  ‘improperly considering the political viewpoint of applicants’ and engaging in ‘clear viewpoint discrimination.’”


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