IRS under Obama focusing on pro-Israel groups

WASHINGTON — The administration of President Barack Obama oversees a unit that is examining non-profit groups that support Israel.

A lawsuit filed in U.S. federal district court has disclosed that the Internal Revenue Service was operating a unit assigned to examine the positions and board members of pro-Israeli non-profit groups. The unit was said to have denied tax-exempt status to at least one organization, called Z Street, on grounds that it opposed Obama’s policy toward Israel.

“Z Street was informed explicitly by an IRS Agent on July 19, 2010, that approval of Z Street’s application for tax-exempt status has been at least delayed, and may be denied because of a special IRS policy in place regarding organizations in any way connected with Israel,” the suit, filed in U.S. district court in Philadelphia, said. “And further that the applications of many such Israel-related organizations have been assigned to ‘a special unit in the D.C. office to determine whether the organization’s activities contradict the administration’s public policies.’ ”

Z Street, established in 2009 as a non-profit educational group, has sued the IRS for refusing an application for tax exemption. Z Street, quoting an IRS agent, said the refusal was based on the group’s advocacy of Israel that differed with administration policy.

Lobbyists said this marked the first time since the 1950s that pro-Israeli non-profit organizations were being threatened with denial of their tax-exempt status for their political positions. Neither the IRS nor the White House has acknowledged the existence of the special unit.

“We don’t know if there are other organizations that have received the same treatment or even if this is a new policy,” Z Street president Lori Lowenthal Marcus said. “People don’t talk about this. But I can guarantee you that they didn’t establish this unit just for Z Street.”

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