TaxProf Blog

Editor: Paul L. Caron, Dean
Pepperdine University School of Law

Tuesday, March 22, 2016

The IRS Scandal, Day 1048

IRS Logo 2Politico, Garland's Tax Record:

REMEMBER Z STREET? Close followers of the controversy surrounding the IRS’s improper scrutiny of tea party groups certainly do. But you might not know about Merrick Garland’s role in the case.

Garland, President Barack Obama’s Supreme Court pick, took the IRS to task and ruled for the conservative pro-Israel group in what our Toby Eckert called “the most notable tax case” Garland saw during his tenure at the U.S. Court of Appeals for the District of Columbia. The appeals court found last year that Z Street could proceed with a suit asserting that its tax-exempt application received more scrutiny and faced delays because the group didn’t agree with the Obama administration about Israel, in what conservative activists called an opening act to the IRS’s tea party controversy.

For his part, Garland spared no scorn with the IRS’s argument that it had a 270-day cushion protecting it from the suit. "You don't really mean that, right? Because the next couple words would be the IRS is free to discriminate on the basis of viewpoint, religion, race [for 270 days]. You don't actually think that?" Garland said, according to The Wall Street Journal. "Imagine the IRS announces today a policy that says as follows: No application by a Jewish group or an African-American group will be considered until one day short of the period under the statute."

The Times of Israel, Garland Previously Blasted IRS Over Case Against Pro-Israel Group:

Merrick Garland may be best known for his work on the Oklahoma City Bombing case, but last year he was one of three judges who blasted the US Internal Revenue Service for trying to squelch information about the Obama administration possibly discriminating against a far right pro-Israel group that was seeking tax exemption status.

The case came to Garland’s court of appeals after a lower court found the IRS could not have a case by Z Street, which was suing and claiming the IRS had discriminated based on the group’s point of view, thrown out.

IRS lawyer Theresa McLaughlin came to court trying to argue that one can’t sue over collection of taxes, but the judges threw it back, citing it was not the point of Z Street’s suit.

When the lawyer tried to argue that Z Street could wait 270 days and then sue, Garland became angry.

“Imagine the IRS announces today a policy that says as follows: No application by a Jewish group or an African-American group will be considered until one day short of the period under the statute… Is it your view that that cannot be challenged,” he said, according to the Wall Street Journal.

The Z Street case is still going on. If it reaches the Supreme Court, Garland may have a chance to rule on it again.

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