Z Street accused the IRS of “targeting pro-Israel groups” in federal court saying that it received a letter from an IRS agent that their 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.”
The complaint also alleges that IRS agent Diane Gentry said applications from organizations dealing with Israel-related issues “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."
Laura Rozen noted in her blog at Politico that the IRS may have been trying to determine whether or not Z Street was an educational organization, which is a requirement for tax exemption.
According to The Forward, applications for tax-exempt status are sent to the IRS’s quality assurance office in Washington if they involve terrorist countries or if the IRS receives a petition from a third party to deny the applicant tax-exempt status. Z Street’s petition could have been sent to Washington for either of those reasons.
But the news caused Mark Whittington, a Yahoo! Contributor Network, to blame the Obama administration: “Considering the pro-Arab tilt by the Obama administration, the charge is not exactly a frivolous one. The administration has been pressuring Israel to make concessions with its Palestinian neighbors and has attacked the Israeli government over (illegal) housing construction in eastern Jerusalem. At the same time, the Obama White House has restrained Israel from openly attacking Iran's nuclear weapons program, preferring to pursue a diplomatic route.”
Several experts on non-profit tax law said the questions to the organization were unusual, at best, though they were also skeptical of the claim that the IRS is specifically targeting pro-Israel groups. ?Former IRS Commissioner Sheldon Cohen said he was skeptical of Z Street's motives in its high-profile lawsuit, rather than pursuing its concerns in tax court. ?“They were hardly into the process when they screamed rape – nobody lifted the dress yet,” he told reporters, noting that 501(c)3 groups can't advocate for political positions. But he called the specific questions “unusual.”?A California tax lawyer, Ofer Lion, told reporters that he thought the question was probably the work of a misguided agent.?“People who work in the field and have done a lot of these applications have seen these bizarre questions shot back at them more than once,” he said.
