The IRS Scandal, Day 1730: Department Of Justice Settles Last Targeting Case; IRS Apologizes For Delaying Pro-Israel Group's Application For Tax Exempt Status For Seven Years

Department of Justice Announces Settlement with Z Street Over Improper IRS Treatment:

The Department of Justice today announced that it has entered into a settlement with Z Street, a non-profit corporation dedicated to educating the public about various issues related to Israel and the Middle East, pending approval by the United States District Court for the District of Columbia.  Z Street alleged that the Internal Revenue Service (IRS) applied heightened scrutiny to applications for tax-exempt status received from organizations connected in any way to Israel, and applied this policy to Z Street’s application, resulting in delay.  The settlement agreement includes an apology from the IRS to Z Street for the delayed processing of the group’s application for tax-exempt status.

“Tax exemption eligibility should be based on whether an organization’s activities fulfill requirements of the law, not a group’s policy positions or the name chosen to reflect those views,” said Principal Deputy Assistant Attorney General Zuckerman. “The attorneys at the Department of Justice work hard to ensure that all Americans receive equal treatment under the law.  Today’s settlement further illustrates this commitment.”

This is the final settlement in a series of cases brought by groups alleging that their tax-exempt status was delayed by the IRS based on inappropriate criteria, including names and policy positions.  The United States District Court for the District of Columbia recently approved settlement agreements in Linchpins of Liberty v. United States and True the Vote v. IRS. In Norcal Tea Patriots v. IRS, the United States agreed to a settlement in this class action lawsuit which is currently pending approval in the United States District Court for the Southern District of Ohio.  In Freedom Path v. IRS, the United States entered into a settlement resolving a wrongful disclosure claim and dismissing other claims, including allegations of improper IRS targeting. A single regulatory challenge remains following the settlement. Freedom Path lost this challenge at the District Court and the issue is currently on appeal to the Fifth Circuit.

Announcement and quote from Attorney General Jeff Sessions in Linchpins of Liberty v. United States and Norcal Tea Patriots v. IRS can be found here.

Attorney General Jeff Sessions Announces Department of Justice has Settled with Plaintiff Groups Improperly Targeted by IRS:

Attorney General Jeff Sessions announced today that the Department of Justice has entered into settlements, pending approval by the district courts, in two cases brought by groups whose tax-exempt status was significantly delayed by the Internal Revenue Service based on inappropriate criteria. The first case, Linchpins of Liberty v. United States, comprised claims brought by 41 plaintiffs, and the second case, NorCal Tea Party Patriots v. Internal Revenue Service, was a class action suit that included 428 members. Attorney General Sessions released the following statement about the cases:

“Chief Justice John Marshall wrote 'that the power to tax involves the power to destroy … [is] not to be denied.' And it should also be without question that our First Amendment prohibits the federal government from treating groups differently based solely on their viewpoint or ideology.”

"But it is now clear that during the last Administration, the IRS began using inappropriate criteria to screen applications for 501(c) status. These criteria included names such as “Tea Party,” “Patriots,” or “9/12” or policy positions concerning government spending or taxes, education of the public to “make America a better place to live,” or statements criticizing how the country was being run. It is also clear these criteria disproportionately impacted conservative groups.”

“As a result of these criteria, the IRS transferred hundreds of applications to a specifically designated group of IRS agents for additional levels of review, questioning and delay. In many instances, the IRS then requested highly sensitive information from applicants, such as donor information, that was not needed to make a determination of tax-exempt status.”

"The IRS’s use of these criteria as a basis for heightened scrutiny was wrong and should never have occurred. It is improper for the IRS to single out groups for different treatment based on their names or ideological positions. Any entitlement to tax exemption should be based on the activities of the organization and whether they fulfill requirements of the law, not the policy positions adopted by members or the name chosen to reflect those views.”

“There is no excuse for this conduct. Hundreds of organizations were affected by these actions, and they deserve an apology from the IRS. We hope that today’s settlement makes clear that this abuse of power will not be tolerated.”

• Accounting Today, DOJ Settles Z Street Lawsuit Over IRS Treatment
• Fox News, Trump DOJ Enters Into Final Settlement in IRS Targeting Scandal
• Wall Street Journal op-ed (Lori Lowenthal Marcus), The IRS Campaign Against Israel—and Us
• Washington Free Beacon, IRS Apologizes to Pro-Israel Group for Biased Treatment

• The IRS Scandal, Day 1722: The IRS Apologizes For Targeting Tea Party Group (Jan. 25, 2018)
• The IRS Scandal, Day 1709: Victims Of IRS's Tea Party Bias — And Taxpayers — Deserve To See Lois Lerner's Testimony (Jan. 12, 2018)
• The IRS Scandal, Day 1706: Lois Lerner, Liberty, And Bureaucracy (Jan. 9. 2018)
• The IRS Scandal, Days 1601-1700 (Oct. 5, 2017 - Jan. 3, 2018)
• The IRS Scandal, Days 1501-1600 (June 18, 2017 - Oct. 4, 2017)
• The IRS Scandal, Days 1401-1500 (Mar. 10, 2017 - June 17, 2017)
• The IRS Scandal, Days 1301-1400 (Nov. 30, 2016 - Mar. 9, 2017)
• The IRS Scandal, Days 1201-1300 (Aug. 22, 2016 - Nov. 29, 2016)
• The IRS Scandal, Days 1101-1200 (May 14, 2016 - Aug. 21, 2016)
• The IRS Scandal, Days 1001-1100 (Feb. 4, 2016 - May 13, 2016)
• The IRS Scandal, Days 901-1000 (Oct. 27, 2015 - Feb. 3, 2016)
• The IRS Scandal, Days 801-900 (July 19, 2015 - Oct. 26, 2015)
• The IRS Scandal, Days 701-800 (April 10, 2015 - July 18, 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)