IRS loses another round in its court battle with Z Street

Tick, tick, tick.  A day of reckoning for the IRS gets closer with a unanimous opinion from a three-judge panel of the D.C. Circuit Court of Appeals in the Z Street case.  Z Street explains:

The pro-Israel organization Z STREET was today, once again, vindicated in a court of law in its now nearly five year effort to redress the violation of its Constitutional rights by the Internal Revenue Service. The judges in their Opinion were far more restrained than their reactions to the IRS arguments during the oral argument which took place on May 4, see, but their conclusion was the same.

In a unanimous Opinion issued Friday, June 19, the D.C. Circuit Court of Appeals agreed with and affirmed the D.C. District Court's ruling that the pro-Israel organization Z STREET correctly brought a lawsuit alleging the Internal Revenue Service violated Z STREET's First Amendment rights by engaging in viewpoint discrimination.

Z STREET filed its lawsuit against the IRS in August, 2010, on the basis of statements made to its counsel by the IRS agent reviewing Z STREET's application for 501(c)(3) charitable tax exempt status, filed in 2009. That agent revealed that the IRS has an "Israel Special Policy" which gave differential treatment to tax exemption applications from organizations holding views about Israel inconsistent with those espoused by the Obama administration, scrutinizing such applications differently and at greater length, than those made by organizations which did not hold such views.

A turnaround time of 6 weeks in an appeal like this is rather speedy, and the unanimous opinion is a rebuke to the IRS.  The May 4 oral arguments were extraordinary, with the IRS virtually laughed out of court.  The written opinion reinforces the vehemence of the rejection.

I have called the case Z Street v. Koskinenthe sleeper case that could bust open the IRS scandals,” because it threatens to uncover the internal processes of the agency, revealing how it makes its decisions.  The IRS is fighting a delaying game, seeking to prevent disclosure of how it made its decision to treat differently applications for tax-exempt status from groups opposing the Obama administration’s policies regarding Israel.  Lori Lowenthal Marcus, head of Z Street and an AT contributor, can now proceed with discovery in the case, subpoenaing officials to testify under oath about how the agency came to discriminate against opponents of the Obama administration.

Z STREET looks forward to the discovery phase of litigation in which it will seek to learn the nature and origin of  the "Israel Special Policy" which 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, to whom it was applied, as well as all other information regarding this policy. 

A series of IRS documents called “Be On the LookOut” lists, which were released by Congress in June, 2013, pursuant to the TIGTA investigation, have already established that, as Z STREET alleges, while Z STREET’s application for tax exempt status was pending, the IRS did indeed create a special category of review for organizations seeking such status, if they were engaged in what the IRS called "occupied territory advocacy." 

Z STREET looks forward to using the discovery process to learn more about the precise nature, origin and effect of this policy, which the DC Circuit has now made clear is a violation of essential Constitutional rights. 

The “precise nature and origin” of the IRS’s discriminatory treatment is where the political dynamite lies. Will we see any more IRS officials taking the Fifth Amendment?

The media, with the exception of our friends at Powerline, is ignoring this key step in the battle to bust open corruption in the most-feared agency of the federal government.  So Z Street remains a sleeper.  For now.

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