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Is the IRS Investigating Pro-Israel Groups for Terrorism Ties?

Court affidavits filed by the IRS indicate that the agency has been giving extra scrutiny to Jewish organizations that provide material or financial support to Israel, out of concerns that these resources may be going to “terrorist” activities.

The court documents came to light during an ongoing legal battle between the pro-Israel group Z Street and the IRS. Z Street filed a lawsuit against the agency in August, alleging that its request for tax-exempt status was delayed because of its support for the Jewish state.

IRS officials now say that Z Street’s application was referred to a special task force that deals with groups that support countries with a “higher risk of terrorism.”

“The application indicated that Z Street could be providing resources to organizations within Israel or facilitating the provision of resources to organizations within the state of Israel,” wrote IRS official Jon Waddell in a Dec. 12 affidavit. “Israel is one of many Middle Eastern countries that have a ‘higher risk of terrorism’”

He said that referring organizations to the IRS’s investigative task force is “appropriate whenever an application mentions providing resources to organizations in a country with a higher risk of terrorism.”

But Z Street founder Lori Lowenthal Marcus denied that the group provided assistance to Israel. “We have never, ever given any money or resources to anybody, or any organization, in Israel at all,” Lowenthal Marcus told me during an interview. “We don’t give money to anything. Even if this ridiculous [IRS] policy exists, Z Street still doesn’t fall within it, so what are they doing?”

She added that the incoming Republican House leadership has expressed interest in potentially launching an investigation into the matter.

Z Street asserts that it isn’t the only pro-Israel group the IRS has targeted. At the end of November, Z Street introduced a letter in court that appeared to show an IRS agent giving unusual scrutiny to another Jewish group that had also applied for 501(c)3 status.

In the letter, the agent asked the group, “Does your organization support the existence of the land of Israel?” At the time, some tax attorneys told Politico’s Ben Smith that they found the IRS’s inquiries to be inappropriate.

Lowenthal Marcus says Z Street will keep moving ahead with its lawsuit, and of course we’ll be following the developments here at CONTENTIONS.