Paul L. Caron

Friday, February 2, 2018

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

Z StreetDepartment 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.”

IRS News, IRS Scandal, Tax | Permalink


Yes, thank you so much. The rest of the media and our worthless congress, not so much.

Posted by: Dale Spradling | Feb 4, 2018 7:14:57 AM

Thank you for covering this story so thoroughly. I did get an email from DOJ about this and I do subscribe to Tax Notes, and I also appreciate your coverage. This is a vitally important story and thank you for keeping us informed.

Posted by: Abe Carnow | Feb 3, 2018 2:23:03 PM

I've read most of these entries and have always pointed out in the comments that Jewish groups were also targeted by Obama's IRS and likely other government agencies as well.

But how many of the articles mentioned that? To my best recollection not more than I have fingers on one hand. Our media is as corrupt as the Obama administration, but then again they were partners.

Posted by: wodun | Feb 3, 2018 1:48:22 AM

Apologies? Using government agencies to go after political opponents is police-state behavior. These people—all the way up the chain—should be doing long prison sentences.

Posted by: Michael W. Perry | Feb 2, 2018 3:57:05 PM

So who got fired at the IRS over their illegal actions?

Posted by: Jack burton | Feb 2, 2018 3:02:14 PM

The nation owes you a debt of gratitude for documenting this sorry situation so doggedly, so accurately, and for so very long.

Posted by: werewife | Feb 2, 2018 9:46:45 AM

so the same people who were screwed by the irs will collect money from the taxpayers and not the criminals

the Republic is 100% F'd

Posted by: Deserttrek | Feb 2, 2018 7:32:48 AM

What, no lawsuit from a major left-of-center or progressive group?

I've been hearing since last year from the Press and the Left that there was no political targeting of conservative groups, because the IRS went after other liberal and progressive groups.

Oh well. I guess they didn't mind that kind of treatment.

Posted by: MM | Feb 2, 2018 7:30:40 AM

Apology would be more meaningful if someone lost their job and/or was convicted and imprisoned! These people did permanent damage to the USA and the ones targeted!

Posted by: Will Morris | Feb 2, 2018 7:08:36 AM

The purpose of all this was to reelect Obama in 2012 -- and it succeeded. These apologies are hollow and meaningless without criminal prosecutions and firings of the federal employees involved.

Posted by: Doc Strange | Feb 2, 2018 6:48:34 AM

A grateful nation thanks you for this incredible work you've done. Time for a book!

Posted by: Jack | Feb 2, 2018 6:18:11 AM