Obama's government denying tax status based on pro-Israeli support?

By Warner Todd Huston

A pro-Israel education group called Z Street is claiming that Obama's IRS has violated its Constitutional rights by denying it tax exempt status solely because it supports Israel, support that apparently runs counter to Obama's stance on Israel.

Z Street reports that Obama's IRS asked a telling question of the group as it sought the tax exemption earlier this year. In August, Z Street filed a lawsuit claiming that the IRS was delaying the consideration because the group is a vocal supporter of the State of Israel and that support apparently runs counter to the Obama's administration's position.

According to the lawsuit, "The case is brought because, through its corporate counsel, Z STREET was informed explicitly by an IRS Agent on July 19, 2010, that approval of Z STREET's application for tax-exempt status has been at least delayed, and may be denied because of a special IRS policy in place regarding organizations in any way connected with Israel, and further that the applications of many such Israel-related organizations have been assigned to 'a special unit in the D.C. office to determine whether the organization's activities contradict the Administration's public policies.'"

In other words, Z Street could be denied status as a 501(c)(3) organization because they differ with Obama on Israel. If this is true, if the Obama administration is targeting organizations that support Israel and then wielding its power over the IRS to harm such groups, that is a clear violation of these groups First Amendment rights.

Paul Caron, a University of Cincinnati law professor, says that the IRS's questions "go far beyond what should be the IRS's role" to ask.

Now in November Obama's administration is moving to dismiss the complaint. In reply, Z Street released the following statement:

Z STREET, an organization devoted to pro-Israel public education, today filed in federal court its Opposition to the government's effort to continue violating the US Constitution by discriminating against the organization because its views on Israel and the Middle East differ from those of this government. On August 25, 2010 Z STREET filed a Complaint in federal court charging the Internal Revenue Service with constitutional violations by subjecting Z STREET's application for tax exemption to a discriminatory process.

In its response to Z STREET's Complaint, the government did not deny that it engaged in this First Amendment violation. Instead, the government's position is that (1) it can violate the Constitution whenever it wants and the only way to stop it is if the government agrees to be stopped, and (2) Z STREET should go to a different court to get something it should already have — tax exempt status — were it not for the constitutional violation the government has inflicted upon it.

"As every American knows, the US government is bound by the Constitution, and it can be hailed into court and ordered to cease unconstitutional action whether it consents or not," said Lori Lowenthal Marcus, president of Z STREET. "This evasive measure simply compounds the unconstitutional process by which our effort to achieve tax-exempt status has been, and is being, reviewed."

Marcus added, "we have provided evidence that another applicant for charitable exemption was asked by the IRS, in writing, in connection with its application, whether it supports the existence of Israel, and what that organization's religious beliefs are about Israel. The other organization is a Jewish one with a religious focus and has nothing to do with Israel at all," she said. "There is something very serious, and very wrong, in the process the IRS is using to allocate tax exempt determinations, and Z STREET is committed to exposing and righting that wrong."

© Warner Todd Huston