Perhaps the smallest and least funded organization involved in the IRS scandal may turn out to be the one that blows the cover off the entire sordid affair. That group is Z Street, a Zionist organization, which sued the IRS before Lois Lerner admitted the bias.
The pro-Israel organization was vindicated yesterday in a court of law in its nearly five-year effort to redress the violation of its Constitutional rights by the Internal Revenue Service. The judges were more restrained in their opinion than in their reactions to the IRS oral arguments, which took place in May (Judges Eviscerate IRS Lawyers For Arguing They Can Discriminate Based On Viewpoints For 270 Days). Their conclusion, however, was the same.
In a unanimous ruling, the D.C. Circuit Court of Appeals agreed with and affirmed the D.C. District Court’s ruling that the IRS violated Z Street’s First Amendment rights by engaging in viewpoint discrimination. While not a tea party-affiliated organization, Z Street’s 501(c)(3) application was held up for the same reason — viz., that their viewers are not consonant with those of the Obama administration.
Z Street was created as a non-profit organization with the purpose of “educating the public about Zionism; about the facts relating to the Middle East and to the existence of Israel as a Jewish State; and about Israel’s right to refuse to negotiate with, make concessions to, or appease terrorists.”
Z Street filed its lawsuit in August, 2010 on the basis of statements made to its counsel by the IRS agent reviewing its application for 501(c)(3) charitable tax exempt status, filed in 2009. That agent revealed that the IRS gives different treatment to tax exemption applications from organizations holding views about Israel inconsistent with those espoused by the Obama administration. Such organizations, the agent further noted, are subject to greater scrutiny and that the application review process the takes much longer.
Ironically, Z Street’s case received a boost in 2013 when Democrats tried to defend the administration by proving the IRS was not just engaging in viewpoint discrimination against politically conservative groups. As part of its defense, the Democrats on the House Ways and Means Committee and Senator Sander Levin (D-MI) released 14 IRS documents indicating the IRS created a category for review it labeled “progressive.”
Within that “progressive category” was a subset labeled “occupied territory advocacy.” That particular subset contained only one organization: Z Street. According to the documents, a notice to IRS inspectors to “be on the look out” (BOLO) for groups under this category was sent on August 6, 2010, just days after Z Street’s file was reviewed.
The IRS attempted to squash the Z Street lawsuit so it would not have to respond to the facts of the case. However, in yesterday’s decision, written by Judge David S. Tatel, the court rejected every one of the government’s arguments. First, the court accepted Z Street’s contention that it was a victim of viewpoint discrimination, and was not simply seeking to evade “the assessment of taxes,” as the IRS claimed. Second, the court held that the IRS is not entitled to sovereign immunity in a case like Z Street’s, which posits wrongful action by a government agency or its officers.
Of particular significance, the court emphasized that “tax code may not discriminate invidiously” and that there is a “requirement of viewpoint neutrality in the Government’s provision of financial benefits.”
The organization says it looks forward to the discovery phase of litigation in which it will seek to learn the nature and origin of an “Israel Special Policy” that the IRS applied to Z Street’s tax exemption application. Z Street will seek to learn how such a policy was created, who created it, who approved it, and to whom it has been applied.
The ultimate value of this suit goes way beyond Z Street. The eventual decision will have ramifications that will spread to all groups damaged by the IRS bias during the Obama administration.
Cross-posted at The Lid