by Matthew M. Hausman
President Obama's antipathy for Israel was evident before his
election and predictable considering the anti-Israel animus of the
radical political culture that nurtured him. Thus, it surprised many
observers that Jewish voters would forsake their concern for Israel and
pledge their political troth to his electoral success. But there should
have been no surprise given that most are registered Democrats who
believe in social and economic engineering through interventionist
government regulation and secular statism.
Liberal voters—whether Jewish or Gentile—favor expanding the power
of government to enforce partisan ideals and restructure society, even
at the risk of sacrificing individual rights and liberties. Despite the
buyers' remorse expressed by many Jewish Democrats after witnessing Mr.
Obama's shoddy and disrespectful treatment of Israel, they have failed
to recognize that the sword of big government, which they heartily
endorsed, may now be undercutting pro-Israel advocacy. And nowhere is
this more suspect than in the apparent use of the Internal Revenue
Service to advance the Obama Middle East agenda.
IRS Boundaries
Recently, a new Zionist group called Z Street filed an application
with the IRS seeking 501(c) (3) tax-exempt status. Z Street is a
nonprofit, educational organization devoted to educating the public
about the history of the Middle East, the existence of Israel as a
Jewish state, and Israel's right to refuse to negotiate with or make
concessions to terrorists. Its philosophy is grounded in the Revisionist
Zionism of Zev Jabotinsky and it is similar in spirit to the old
Bergson Group, active during the Second World War. Its mandate and
mission are set forth in its charter, which states, among other things,
the following:
Z STREET maintains that Jews have the right to live anywhere in the
world, including, and especially, within all parts of Israel.
Z STREET is dedicated to maintaining and strengthening the Jewish
State of Israel and firmly believes that there can be no compromises or
agreements with, and no concessions to, any Terrorist Entity or any
individual Terrorists.
Accordingly, Z Street disagrees with the Obama administration's
Middle East policies and with Jewish left-wing groups who promote a
skewed vision that validates the revisionist Palestinian narrative and
endorses the appeasement of those dedicated to the destruction of Israel
as a Jewish state.
Z Street filed its 501(c) (3) application back in December 2009,
having satisfied all the requirements necessary for approval under the
IRS regulations. Nevertheless, according to official documents filed by Z
Street in a lawsuit against the IRS over the matter, an agency
spokesperson stated that Z Street's application was being delayed, and
could be denied, because of a special IRS policy regarding organizations
connected with Israel. The spokesperson further stated that the
applications of many such Israel-related organizations had been assigned
to "a special unit in the D.C. office to determine whether the
organization's activities contradict the Administration's public
policies."
This disclosure—if in fact true—adds a layer of scrutiny that is
neither required by the relevant IRS and Treasury regulations, nor
applicable to other organizations and, consequently, demonstrates a
brazen and unlawful abuse of governmental authority. Upon receiving this
information, Z Street filed the aforementioned lawsuit seeking
declaratory relief and damages in the United States District Court for
the Eastern District of Pennsylvania.
Going Beyond the Code?
IRS Regulation Section 1.501(c)(3)-1(d)(2) defines the term
"charitable" to include the "advancement of education," while Section
1.501(c)(3)-1(d)(3)(i) of the Regulations defines "education" to
include: "(a) the instruction or training of the individual for the
purpose of improving or developing his capabilities; or (b) the
instruction of the public on subjects useful to the individual and
beneficial to the community." Organizations that engage in informative
public activities including forums, panel discussions, and lectures are
deemed to be educational under the Code. Such groups can claim
tax-exempt status even if they espouse controversial viewpoints, as long
as their activities are for the purpose of influencing public opinion
and they provide the facts upon which their positions are based and from
which members of the public can draw their own conclusions. From its
inception, Z Street has promoted and engaged in precisely these kinds of
activities.
The test for determining whether a nonprofit group is educational,
and thus eligible for tax exemption, is set forth in Revenue Procedure
86-43, 1986-2 C.B. 729, which looks at the methodology used by
applicants to develop and present their views. An organization can
qualify by showing: "(a) a factual foundation for the viewpoint being
advocated; or (b) a developed presentation of the relevant facts that
would materially aid a listener or reader in a learning process." In
that Z Street's methodology satisfies these standards, the approval of
its application for exemption should have been academic. The regulations
provide no room to consider whether or not an organization's views
diverge from the Obama administration's policies—or any administration's
policies for that matter—which are political in nature and do not
constitute the "law of the land."
If true, the hijacking of the IRS approval process to delay or deny
tax-exempt status to organizations that support Israel constitutes an
assault on the First Amendment because it impermissibly penalizes the
exercise of protected speech. There is no requirement that applicants
must agree with a particular administration's partisan positions or
transient policies. The delaying of tax-exempt status from private
groups that express dissenting viewpoints would therefore be nothing
more than a transparent attempt to punish such organizations by
inhibiting their ability to raise funds through deductible
contributions, thereby restricting their ability to finance educational
and promotional activities. The clear intent would be to silence
dissent.
Obama's New Twist
The strategic abuse of IRS authority for political reasons is not a
new phenomenon. On the contrary, it has been employed by Democrats as
well as Republicans to punish ideological nonconformity since the
institution of the income tax. During the Second World War, for example,
the American Jewish Committee (AJC) requested the IRS to audit the
Bergson Group's finances because of its outspoken criticism of
Roosevelt's anemic response to the Holocaust and its support for the
Irgun. The Bergson Group—unlike Rabbi Stephen Wise, the AJC, and other
Jewish acolytes of Franklin Roosevelt—was dedicated to publicizing the
Holocaust as it unfolded and exposing FDR's refusal to take meaningful
steps to prevent the slaughter. At the administration's request, Rabbi
Wise, the AJC, and others attempted to discredit the Bergson Group and
its supporters and derail their advocacy efforts.
Punitive though these kinds of abuses may have been, they appear to
have been singular measures—often instigated by private citizens—taken
in response to specific conduct with which the administration in power
disagreed. Such partisan measures were certainly intended to punish the
exercise of protected speech, but they were not enforced as part of a
"special unit" created for the sole purpose of "determin[ing] whether
the organization's activities contradict the Administration's public
policies."
If in fact such a special unit exists within the IRS, the dilatory
handling of Z Street's application would appear to be a concerted and
politically motivated abuse of power. The government's clear intent
would be to rebuke groups "connected to Israel" for adopting positions
that acknowledge the sovereignty of a reliable ally of the United
States, but which contradict administration policies that undercut the
safety and security of that same ally.
It may or may not be coincidental that the disclosure of the
existence of a "special unit" occurred not long after the left-wing
organization J Street announced its campaign to lobby the Treasury
Department to revoke the tax-exempt status of Jewish charities that
support religious and cultural institutions in Judea and Samaria.
Religious Preference?
The treatment of Z Street stands in stark contrast to the respect
accorded to the Council on American Islamic Relations (CAIR), an
organization described as an "unindicted co-conspirator" during the Holy
Land Foundation prosecution. As has been widely reported, the Holy Land
Foundation was a Muslim charity operating within the United States,
which was indicted along with several individual defendants for inter alia
raising and distributing funds to Hamas, a designated foreign terrorist
organization. Documents released by the Department of Justice showed
that the Foundation had ties to the Muslim Brotherhood and essentially
served as a fund-raising conduit for Hamas. Its assets were frozen and
seized, and it was prosecuted over the course of two trials, during
which CAIR was included on a "list of unindicted co-conspirators and/or
joint venturers" attached to the government's pretrial brief. The first
proceeding ended in a mistrial, but the second ended in convictions for
the Foundation and the individual defendants on multiple counts.
While CAIR denied this characterization and sought to have its name
removed from the list, in an appeal by the third party North American
Islamic Trust (NAIT), the court ruled that the government should have
filed the "list of unindicted co-conspirators and/or joint venturers"
under seal, but refused to issue an order restating that NAIT's rights
were violated or that its name be expunged from the document. CAIR filed
an amicus brief but was not a party to the appeal.
Despite CAIR's apparent association with the Holy Land Foundation,
the organization never lost its 501(c) (3) tax-exempt status and was
never flagged for investigation by the current administration, which
entered office a mere two months after the second trial's end. Moreover,
the organization has a friendly history with the Obama White House, to
which it reportedly has had open access since the early days of Mr.
Obama's presidency.
In light of the administration's cordial relations with CAIR, the
disparate treatment accorded Z Street by the IRS is most curious indeed.
It seems ironic that the administration would show deference to an
organization that was associated with a group found to have channeled
funds to those opposed to American interests and values, while at the
same time attempt to obstruct an organization that supports the
sovereign rights of Israel—a stable and reliable ally that promotes
western democratic values. And the White House has done so by apparently
subverting an agency approval process over which it should have no
control.
What's Next?
If the Obama administration is requiring that IRS applications of
Israel-related organization be vetted for conformity with the
administration's Middle East policies, the Obama White House has
co-opted the agency's authority in a way that exceeds its original
regulatory mandate.
Such use of the IRS would not be an aberration, but would rather
foreshadow the administration's intention to expand the agency's power
to enforce policies that are designed to expand the role of government
into the private sector, most notably with respect to implementation of
the Obama health care plan.
Critics of government-controlled health care are concerned that it
will tie up a disproportionate share of the national budget, create
dramatic tax consequences, and intrude into the personal decision-making
process regarding insurance and treatment options. It also will require
the greatest expansion of the IRS in 65 years, fueled by the creation
of perhaps 16,500 positions to collect new taxes, monitor the purchase
of insurance coverage, and mete out penalties for noncompliance.
Regulatory changes exceeding the original enabling legislation will be
needed to legalize the agency's use as a health care monitoring and
enforcement agency. Although skeptics might argue that health care and
Middle East policy are separate and distinct arenas having nothing to do
with each other, the administration's apparent use or abuse of the
taxing authority to effect social change and discourage dissent comes
from the same philosophical place.
Although Jewish liberals may support the president's health care
boondoggle, one must wonder whether they understand the connection
between the expansion of government to effect ideologically driven
legislation and the abuse of governmental authority to penalize opposing
viewpoints. If Z Street's claim proves true, the partisan abuse of IRS
authority to curtail pro-Israel advocacy is simply another side of the
same impulse that sees expanded government as the appropriate engine for
social change.
Matthew M. Hausman is a trial attorney, writer, and former journalist.
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