The IRS Scandal, Day 728

Wall Street Journal editorial, The IRS Goes to Court:

The agency suggests it can discriminate for 270 days. Judges gasp.

It isn’t every day that judges on the D.C. Circuit Court of Appeals declare themselves “shocked.” But that happened on Monday when an animated three-judge panel eviscerated the IRS and Justice Department during oral argument in a case alleging the agency delayed the tax-exempt application of a pro-Israel group due to its policy views.

In December 2009, Pennsylvania-based Z Street applied for 501(c)(3) status to pursue its pro-Israel educational mission. In July 2010, when the group called to check on what was taking so long, an IRS agent said that auditors had been instructed to give special attention to groups connected with Israel, and that they had sent some of those applications to a special IRS unit for additional review.

Z Street sued the IRS for viewpoint discrimination (Z Street v. Koskinen), and in May 2014 a federal district judge rejected the IRS’s motion to dismiss. The IRS appealed, a maneuver that halted discovery that could prove to be highly embarrassing. Justice says Z Street’s case should be dismissed because the Anti-Injunction Act bars litigation about “the assessment or collection of tax.” Problem is, Z Street isn’t suing for its tax-exempt status. It’s suing on grounds that the IRS can’t discriminate based on point of view.

The three judges—Chief Judge Merrick Garland,David Tatel and David Sentelle—were incredulous. You say they want a tax exemption, but that’s not the complaint, Judge Sentelle admonished government lawyer Teresa McLaughlin: “They are not in court seeking to restrain the assessment or collection of a tax, they are in court seeking a constitutionally fair process.”

The suit should also be foreclosed, the government argued, because under Section 7428(b)(2) of the Internal Revenue Code groups may sue to obtain their tax-exempt status if no action has been taken for 270 days, and that should be an alternative to Z Street’s approach.

“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?” Judge Garland said. “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?”

The judges also asked why the government had buried the key precedent in a footnote in its brief. In Direct Marketing Association v. Brohl, the Supreme Court decided that the language of the Anti-Injunction Act did not preclude cases like Z Street’s. In a previous case before the D.C. Circuit, Judge Garland noted, the court also “rejected” the exact arguments the government was making, “so in a way we have already decided every issue before us today, against you.” ...

The Beltway media may be bored, but the IRS scandal is a long way from over.

• American Thinker, IRS Arguments Draw Derision from D.C. Circuit Court of Appeals
• Jewish Press, IRS Pummeled by Court for Suggesting OK to Discriminate Against Pro-Israel Group
• Wall Street Journal, The Government's Odd IRS Argument
• Washington Free Beacon, Judges Rip Apart IRS Defense in Political Targeting Case

• The IRS Scandal, Day 727 (May 6, 2015)
• The IRS Scandal, Day 726 (May 5, 2015)
• The IRS Scandal, Day 725 (May 4, 2015)
• The IRS Scandal, Day 724 (May 3, 2015)
• The IRS Scandal, Day 723 (May 2, 2015)
• The IRS Scandal, Day 722 (May 1, 2015)
• The IRS Scandal, Day 721 (Apr. 30, 2015)
• The IRS Scandal, Day 720 (Apr. 29, 2015)
• The IRS Scandal, Day 719 (Apr. 28, 2015)
• The IRS Scandal, Day 718 (Apr. 27, 2015)
• The IRS Scandal, Day 717 (Apr. 26, 2015)
• The IRS Scandal, Day 716 (Apr. 25, 2015)
• The IRS Scandal, Day 715 (Apr. 24, 2015)
• The IRS Scandal, Day 714 (Apr. 23, 2015)
• The IRS Scandal, Day 713 (Apr. 22, 2015)
• The IRS Scandal, Day 712 (Apr. 21, 2015)
• The IRS Scandal, Day 711 (Apr. 20, 2015)
• The IRS Scandal, Day 710 (Apr. 19, 2015)
• The IRS Scandal, Day 709 (Apr. 18, 2015)
• The IRS Scandal, Day 708 (Apr. 17, 2015)
• The IRS Scandal, Day 707 (Apr. 16, 2015)
• The IRS Scandal, Day 706 (Apr. 15, 2015)
• The IRS Scandal, Day 705 (Apr. 14, 2015)
• The IRS Scandal, Day 704 (Apr. 13, 2015)
• The IRS Scandal, Day 703 (Apr. 12, 2015)
• The IRS Scandal, Day 702 (Apr. 11, 2015)
• The IRS Scandal, Day 701 (Apr. 10, 2015)
• The IRS Scandal, Days 601-700 (Dec. 31, 2014 - April 9, 2015)
• The IRS Scandal, Days 501-600 (Sept. 22, 2014-Dec. 30, 2014)
• The IRS Scandal, Days 401-500 (June 14, 2014 - Sept. 21,2014)
• The IRS Scandal, Days 301-400 (Mar. 6, 2014 - June 13, 2014)
• The IRS Scandal, Days 201-300 (Nov. 26, 2013 - Mar. 5, 2014)
• The IRS Scandal, Days 101-200 (Aug. 18, 2013 - Nov. 25, 2013)
• The IRS Scandal, Days 1-100 (May 10, 2013 - Aug. 17, 2013)