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Thursday, August 26, 2010     GET REAL

IRS under Obama zooms in on pro-Israel groups

WASHINGTON — The administration of President Barack Obama oversees a unit that is examining non-profit groups that support Israel.


A lawsuit filed in U.S. federal district court has disclosed that the Internal Revenue Service was operating a unit assigned to examine the positions and board members of pro-Israeli non-profit groups. The unit was said to have denied tax-exempt status to at least one organization, called Z Street, on grounds that it opposed Obama's policy toward Israel.

"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," the suit, filed in U.S. district court in Philadelphia, said. "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.' "

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Z Street, established in 2009 as a non-profit educational group, has sued the IRS for refusing an application for tax exemption, Middle East Newsline reported. Z Street, quoting an IRS agent, said the refusal was based on the group's advocacy of Israel that differed with administration policy.

Lobbyists said this marked the first time since the 1950s that pro-Israeli non-profit organizations were being threatened with denial of their tax-exempt status for their political positions. Neither the IRS nor the White House has acknowledged the existence of the special unit.

"We don't know if there are other organizations that have received the same treatment or even if this is a new policy," Z Street president Lori Lowenthal Marcus said. "People don't talk about this. But I can guarantee you that they didn't establish this unit just for Z Street."

The suit, filed on Aug. 25 and which lists IRS commissioner Douglas Shulman as defendant, has demanded tax-exempt status as well as full public disclosure of what Z Street termed "the application of Israel special policy." Z Street, established in 2009, said it was a non-profit organization that supported Israel's right to refuse to "negotiate with, make concessions to, or appease terrorists."

"These statements by an IRS official that the IRS maintains special policies governing applications for tax-exempt status by organizations which deal with Israel, and which requires particularly intense scrutiny of such applications and an enhanced risk of denial if made by organizations which espouse or support positions inconsistent with the Obama administration's Israel policies, constitute an explicit admission of the crudest form of viewpoint discrimination, and one which is both totally un-American and flatly unconstitutional under the First Amendment," the suit said.

In January 2010, Z Street applied to the IRS for tax-exempt status, granted to non-profit organizations that engage in educational activities. Five months later, the suit said, IRS agent Diane Gentry requested additional information on Z Street, including personal information on each board member. Z Street said Ms. Gentry refused to respond to several inquiries regarding the group's application.

"On July 19, 2010, Z Street's corporate counsel called again, and this time spoke with IRS agent Gentry who advised Z Street's counsel that she had two concerns regarding the application," the suit said. "One: the advocacy activities in general; and 2. the IRS's special concern about applications from organizations whose activities are related to Israel, and that are organizations whose positions contradict the U.S. administration's Israeli policy."

IRS said Z Street could be termed an "action organization" dedicated to lobbying rather than education, the suit said. The suit quoted Ms. Gentry as saying that IRS would examine "the method used by the organization to develop and present its views."

"Agent Gentry also informed Z Street's counsel that the IRS is carefully scrutinizing organizations that are in any way connected with Israel," the suit said.

Z Street, which acknowledges that its positions on Israel have differed from the administration, said other organizations that agree with the White House were quickly granted tax-exempt status. The suit did not identify the organizations but a leading Washington-based consultant, Lenny Ben-David, cited J Street, which has been invited to the White House for consultations on Israel.

"Plaintiff [Z Street] further seeks injunctive relief mandating complete disclosure to the public regarding the origin, development, approval, substance and application of the special policy," the suit said.

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