The head of the DOJ's Tax Division and RNLA member Richard Zuckerman stated:
“Tax exemption eligibility should be based on whether an organization’s activities fulfill requirements of the law, not a group’s policy positions or the name chosen to reflect those views,” said Principal Deputy Assistant Attorney General Zuckerman. “The attorneys at the Department of Justice work hard to ensure that all Americans receive equal treatment under the law. Today’s settlement further illustrates this commitment.”This is a remarkably refreshing view from DOJ, respecting the rule of law instead of liberal policy objectives. The Founder of Z Street, which seeks to educate Americans about issues relating to Israel and the Middle East, wrote a disturbing account in the Wall Street Journal regarding her organization's discriminatory treatment by the Obama IRS:
[T]he application [filed in December 2009] languished. In late July 2010, an IRS agent truthfully responded to our lawyer’s query about why processing was taking so long: Z Street’s application was getting special scrutiny, the agent said, because it was related to Israel. Some applications for tax-exempt status were being sent to a special office in Washington for review of whether the applicants’ policy positions conflicted with those of the Obama administration. . . .
Now we know the truth, and it’s exactly as bad as we thought. IRS documents—those they didn’t “lose” or otherwise fail to produce—reveal the following:
• Our application was flagged because Z Street’s mission related to Israel, a country with terrorism. Therefore, an IRS manager in our case said in sworn testimony, the IRS needed to investigate whether Z Street was funding terror.
• Some applications for tax-exempt status were indeed being sent to IRS headquarters in Washington for more intense scrutiny. They were selected because of the applicants’ viewpoint.
• In August 2010, three other Jewish organizations applying for tax-exempt status were asked by the IRS to “explain their religious beliefs about the Land of Israel.”
Our own investigation disclosed that between 2009 and 2016, while Z Street’s application was stalled, the IRS needed no special scrutiny to grant numerous applications for tax-exempt status that explicitly proclaimed donations would be spent in Gaza—a territory formally under the jurisdiction of Hamas, which the U.S. State Department designates as a terror organization.
While claiming to be investigating Z Street’s funding of terror, the IRS never asked how or where Z Street spent its money. The IRS ultimately granted Z Street’s application, in October 2016, without asking anything about terror, or money, or anything else it hadn’t known in 2010.Lori Lowenthal Marcus went on to explain how the Obama Administration's unofficial policy positions on Israel influenced her organization's treatment by the IRS, even though it only sought to educate Americans and spend its funds in America, and the immense damage wrought to her fledging organization by the IRS' seven years of delay. The proposed consent order contains more details about the IRS' treatment of Z Street.
While Z Street and the other organizations against which the IRS discriminated because their viewpoints differed from the Obama Administration's can never have the lost years of fundraising, activity, and advocacy back, we are grateful that the Trump-Sessions DOJ is taking steps to recognize the wrongs committed by the IRS, end the interminable litigation, and let these non-profits move on to focus on their missions.