Z STREET vs. The IRS

an interview with Lori Lowenthal Marcus by Jerry Gordon (August 2013)

The American public was aroused by allegations and documentation of political discrimination by The Internal Revenue Service (IRS) released in hearings before the House Oversight and Government Reform Committee in May and later hearings before the House Ways and Means Committee in June and July 2013.  The hearings were triggered by a report released on May 14, 2013 from The Treasury Inspector General for Tax Administration, “Inappropriate Criteria Were Used to Identify Tax-Exempt Applications for Review.” The report revealed a broad pattern of discrimination against several hundred conservative groups who had filed for tax exempt status under Section 501 (c) (4) of the Internal Revenue Code. President Obama was appalled, Congressional committees were angered and soon a parade of witnesses including retired and former IRS Commissioners appeared. One senior IRS official, Lois Lerner, look the Fifth Amendment in her appearance. A House Oversight and Government Reform Committee Hearing on July 18, 2013 had appearances by both current Cincinnati and recently retired Washington, DC senior tax personnel that appeared to tie the disputed special reviews to a political appointee, IRS General Counsel, William Wilkins.

This is particularly acute for Z STREET, because the active discrimination in processing its application well over three years ago led to a filing of a cause of action against a former Commissioner of the IRS, Douglas Shulman in August 2010. The filing accused the federal tax agency of viewpoint discrimination in violation of the First Amendment. That preceded disclosures in May 2013 about similar activities by the IRS against conservative political groups with titles like, “Tea Party,” “Patriots” and others. 

Z STREET, the pro-Israel Zionist group, went to Federal court in Washington, DC on Friday, July 19, 2013 in the matter of Z Street v Douglas Shulman, former IRS commissioner. A hearing was held before Judge Ketanji Brown Jackson in the DC Federal District Court. The hearing came nearly three years after Z STREET filed its original complaint in the Eastern District Court in Pennsylvania. After two years, the judge in the Philadelphia Federal court ordered the transfer of jurisdiction as most cases involving the IRS were heard in the DC Federal court and in her Order noted that she “agrees with the Plaintiff that this case is about a Constitutional Process.” The Z STREET case against the IRS has received national attention following disclosures by the House Ways and Means Committee effectively revealing evidence of viewpoint discrimination by the IRS against Z STREET in contradiction to IRS representations in their filed Motion for Dismissal.

A news release by Z STREET, issued  just prior to the DC court proceeding cited the June 24, 2013 House Ways and Means release of acting IRS Commissioner Danny Werfel’s responses to a letter from Ranking  Member, Sander Levin (D-MI). Z STREET’s supplementary filing revealed that there were no "progressive" groups scrutinized by the IRS "Touch and Go" Group (TAG) in Washington, DC. Instead due diligence of the IRS documents revealed that Z STREET was the sole subject by the TAG review because of “Israel-connected” views of the group in its original 501 (c ) (3) application.   

Alana Goodman of The Washington Free Beacon who attended the DC Federal Court hearing noted in her report the IRS argument and the reaction of Judge Brown:

The government argued in court on Friday that Z STREET should resolve its tax-exempt status, which is still in limbo, before any policy questions can be addressed.

Judge Ketanji Brown Jackson seemed skeptical of the argument, saying that the government appeared to be mischaracterizing the remedy that Z Street was seeking.

“That’s not what they want,” Judge Jackson snapped at one point.

Z STREET said the government was misrepresenting its position.

“We’re not seeking tax-exempt status in this case. We are seeking an untainted process,” said counsel Jerome Marcus. “What is the policy that the IRS has been following since 2010, and is that process constitutional?”

Is the Z Street case against the IRS evidence of bureaucratic ineptitude or something else? If discovery is granted by the DC Court ruling we may find who and why a unconstitutional act of viewpoint discrimination was perpetrated against Z STREET.

Against this background, we interviewed Lori Lowenthal Marcus. Ms. Marcus is co-founder of Z STREET. She calls herself a recovered First Amendment Lawyer.  She is also the U.S. correspondent for The Jewish Press.  

Jerry Gordon:  Lori, thank you for consenting to this interview.

Lori Lowenthal Marcus:  Thank you for inviting me.

Gordon:  When was Z STREET organized?

Marcus:  A group of us began talking about possibly forming a sincerely pro-Israel organization in  2008. There had been a proliferation of groups calling themselves pro-Israel that many of us felt were not helpful at all. That is, they were simply more of the same, more middle of the road and then, increasingly, more flatly - as we saw it - anti-Israel groups dressed up in “pro-Israel” clothing. This was happening while the number of organizations at the other end of the spectrum, the more ardently pro-Israel groups had remained stagnant for years. That is why we began to consider starting a new organization, Z STREET.

Gordon:  What are the group’s objectives and mission?

Marcus:  We decided to form Z STREET because the final straw was the creation of a group called J Street. Many people thought the “J” stood for Jewish. It doesn’t. They claim to be the voice that isn’t heard, like the street in Washington D.C., “J Street,” which doesn’t exist. That voice is practically the only one that is heard in the discussions about Israel. So that pushed us over the edge.

We chose our name, as a play on J Street, but with a twist. The name Z STREET was chosen, and Z stands for Zionists: we are proud of it. It's a word that should be said out loud. It's not a dirty word. We are pro-Israel. We believe in Israel as a Jewish state, and we wanted to say that this group of Zionists is not afraid to say out loud that we think it is a big mistake that Israel should not be forced into, making concessions to, appeasing or negotiating with terrorists. The goal of the peace process should be peace, rather than what it has metamorphosed into which is the creation of a Palestinian State. That is what J Street pushes for, relentlessly. That is what so many “pro-Israel,” and “pro-peace” groups push. While the truth is rather than bringing us closer to peace, it will bring us even more violence and destabilization in the Middle East.

Gordon:  When did Z STREET choose to file for a tax exempt status under Section 501(c)(3) of the Internal Revenue Code?

Marcus:  Z STREET filed for non-profit status with Pennsylvania in November of 2009, and in December of 2009 we filed our Application for Tax Exempt Status under 501(c)(3) with the IRS.

Gordon:  How much time elapsed before you heard a response from the Cincinnati IRS Processing Unit and what was it?

Marcus:  We filed in December of 2009, and in May of 2010 we received a series of questions from the IRS, asking for specific information about our activities. The IRS required that we produce for them, essentially, every document we had ever sent, emailed, posted or thought of. Also, as you will recall, they wanted additional information about our board members, even though we had already provided all of that in our application.

By the middle of June 2010 we had compiled all of the information - it was several inches thick - and sent it all to the IRS. 

Then in July 2010, seven months after we filed our application for tax exempt status, our tax lawyer contacted the IRS agent in charge of our file. The lawyer asked her what was happening with our application, were they satisfied with what we had supplied, did they need additional information? She asked general questions, to get a sense of where we were in the process. And the response from the IRS agent is what set off the whole next stage.

Gordon:  What exactly did the IRS agent tell your tax lawyer in July 2010?

Marcus:  The IRS agent, her name is Diane Gentry, told our lawyer that the “IRS has to give special scrutiny to organizations connected to Israel.” And then the agent told our lawyer, some of those organizations “have to be sent to a special unit in Washington D.C. to determine whether the activities of the organization contradict the public policies of this administration.” Our lawyer then contacted us and told us exactly what the IRS agent had told her.

Gordon:  On what grounds did you determine that this was a First Amendment "viewpoint discrimination matter"?

Marcus:  The words themselves. You cannot look at an organization that is a purely educational organization - we weren’t doing anything other than providing factual information not easily obtainable elsewhere - and were posting it on our website and sending out emails with that information. What we were doing was purely educational information from a point of view that is different from what most other organizations and media outlets provide. And it is a violation of the U.S. Constitution to discriminate against someone - that is, to treat someone differently - on the basis of someone’s viewpoint, even when that viewpoint contradicts the position of this or any other U.S. administration. As a lawyer who used to practice First Amendment law, I knew immediately that what the IRS agent said the IRS was doing was extremely problematic. I then met with the Z STREET board and had an amazing conversation with people who are very savvy and who, despite knowing the dangers of going up against the IRS understood that it was incumbent upon us to say, “no, this is not acceptable behavior by the government. We are going to file a lawsuit against the IRS, and we did that, knowing that the IRS is one scary place.”

Gordon:  When did Z STREET retain counsel and where was the action on the grounds of viewpoint discrimination initially filed against the IRS?

Marcus:  I had to make sure that I had a good pro bono lawyer who is sophisticated, clever and willing to take on a case like this one. Luckily I'm married to such a lawyer, and he was willing to take the case. He agreed to represent Z STREET even though it takes an enormous amount of time, energy and resources. We filed Z STREET v Shulman (he was the IRS Commissioner at the time) in the Federal District Court of the Eastern District of Pennsylvania because that is where Z STREET was registered as a corporate entity, and it is where the lead contact - me - and the lawyer live.

Gordon:  Was there any subsequent response from the IRS Counsel and what was it?

Marcus:  There were several responses. Some of them were consistent. Some of them were inconsistent. The first legal response was, “how dare you sue us, we have governmental immunity. You can't sue the government!” To which we responded, “hello, that's why the Bill of Rights was passed - to protect U.S. citizens from wrongful activity by the government.”  It is only about protecting citizens from the government. The government can be sued for Constitutional violations, and we were claiming their action - viewpoint discrimination - violates our freedom of speech on First Amendment grounds. Honestly, it's a little bit frightening that they would even make that claim. 

Second, the IRS has repeated in every court filing, they keep trying to twist our claim into being one solely about getting a determination about our tax exempt status. You know that sounds like legal mumbo jumbo and a distinction that isn’t very significant. However, there is a world of difference between what they mischaracterize as our claim and our actual one. 

You see, if all we were asking for is for a final determination: either yes, we are entitled to tax exempt status, or no, we are not eligible for tax exempt status, the IRS is quite correct. We did it wrong: we went to the wrong court and we filed too early. However, since that is not what we are seeking, the claims of the IRS that our claim is untimely is irrelevant.  

What Z STREET wants the court to determine is whether or not our organization was subject to an unconstitutional process. Was our application treated differently because of who we are and what we think, rather than what we did or what we wanted to do.

If our organization was subject to a different, and lengthier process of review simply because of our political or ideological viewpoint, that is wrong, right there. That is viewpoint discrimination and it is not permissible.

What we are asking for is to learn about what process the IRS engaged in - there needs to be transparency, and that is what we are seeking.

In addition to the “you can’t sue us, we’re the government” defense, and the repeated attempts to twist our claim into something it isn’t, the IRS finally came up with another defense.

This argument the IRS apparently believes to be a humdinger of a defense which is, “well, of course we had to look carefully at Z STREET's application more closely, and that is because Z STREET deals with Israel and Israel is a country in which there is a higher risk of terrorism, and you know, Z STREET might be funding terrorism,” QED. A couple of points about that, (a) terrorism happens in Israel. It isn't the source of terrorism; (b) that isn't the law. Israel is not on the designated Foreign Terrorist Organization list; (c) Z STREET wasn't funding anyone, anywhere for anything so to suggest that by looking at our application and the information on our website it is close to incredible. In sworn statements made to the court by an IRS manager in charge of the “Touch and Go” Group (TAG), he claimed that it looked to him as though it might be that Z STREET was funding terrorism. It's so completely absurd - there is no way to make this claim with a straight face, and yet this is what they did. One has to conclude that, given how insane that claim is, there must be something they are desperate to hide.

Nonetheless, the IRS was very pleased with this defense, this “you support Israel, therefore you might be funding terrorism” idea. 

Frankly, I'm shocked that the mainstream Jewish and all the pro-Israel organizations, and, really, every Jew and every Zionist alive didn't jump all over this. It is just so offensive, and yet most people didn't really respond.

Gordon:  Why was the matter transferred from the Federal Court in Eastern Pennsylvania to the D.C. Federal Court?

Marcus:  That is a very good question and in a parallel universe I would have loved  to have asked  the Judge why she did that because her Order was inconsistent. She wrote in her Order that she was transferring our case because the D.C. court has jurisdiction over cases like this, she probably meant cases dealing with the IRS. Well, that is true if you are trying to get a court to make a determination about your organization’s tax exempt status. If we had filed that other kind of lawsuit, the one the IRS kept insisting we were, that would be true. However, the Pennsylvania Federal judge also put in this very brief Order transferring our case to the District Court in Washington, D.C., that she “agrees with the Plaintiff that this case is about a Constitutional Process.” If that is the case, then it isn't one of those tax cases that go to D.C.

But the Order to transfer the case is not a “final Order,” meaning it is not one a litigant can bring an appeal over. Given that the Pennsylvania judge had held the case for more than two years and not ruled on anything yet, we decided, “okay, we’ll have to see whether we will get a judge who is ready to move on this case.” When the current judge finally was assigned to our case, she acted relatively promptly, so that was good news. However, the original Order was really a mixed bag, one that was quite peculiar.

Gordon:  When was the DC Federal Court hearing on the matter?

Marcus:  It was held on Friday, July 19, 2013 at the Federal District Court in Washington D.C.

Gordon:  Could you outline for us the contents of your supplementary filing which has some interesting elements in it?

Lowenthal:  As you and most everybody know, there is a very big scandal involving the IRS which came to light in May. The scandal involves alleged targeting, and therefore long delays and burdensome requirements, by the IRS of the tax exemption applications of politically conservative groups. The IRS‘s Lois Lerner admitted the IRS was doing exactly what we claim it did to us in our lawsuit. She admitted the IRS was doing what its top management repeatedly told congressional committees it was not doing.

Everybody reacted with shock and outrage, including President Obama. What then commenced was the request that the Treasury Department’s Inspector General conduct an investigation and present a report of his findings, and several congressional committees conducted hearings into the matter. The Inspector General’s Report revealed that, indeed, politically conservative groups were targeted inappropriately by the IRS. At that point people stopped joining together and being outraged, and instead it became Democrats v. Republicans in the "Blame Game."

The ranking Democrat on the House Ways and Means Committee, Rep. Sander Levin (D-MI), was told that on some of the documents the IRS had handed over to the investigators, the word “progressives” appears as a category. So Rep. Levin went ballistic and issued a scathing press release, and attached 14 documents which had been turned over by the IRS, and a letter to the Inspector General, saying, “hey, wait a minute something called Progressives is on a list too.” He took this to mean that the IRS didn't only go after Conservative groups, they also went after liberals. So maybe the IRS did something wrong, and they also did it to liberals. So then the big headlines from the media which had been following the scandal darted off in a different direction, this time claiming, “the IRS was also targeting Progressives.” End of scandal, end of story, let's move on.

The way this is relevant to Z STREET as it turns out, is on those documents which Rep. Levin turned over, a category appears that was created by the IRS to place certain applicant groups which the IRS deemed should have additional scrutiny, and that category itself is called "Occupied Territory Advocacy." How is it possible that such a category was one the IRS created? It has nothing to do with anything that is in the mandate of the IRS. That is a purely political and ideological categorization. Then it gets even more interesting. In the headings across the top of the chart there is one in which the problematic feature of the organizations pulled for special scrutiny are described. And in this cell of the chart the term “disputed territories” is used. Now, you know and I know that there is no one who is adverse to Jews living in the territories, certainly no one in the BDS Movement or in any organization that you and I would call anti-Israel or hostile to Israel who would ever refer to that geographic location as the “disputed territories.” Those people only use “occupied territories” or the “Israeli Occupied Territories” or the media refers to that area as the West Bank and that is what most people say. Some groups who believe that Jews are entitled to live in that area of the Middle East, refer to it as Judea and Samaria. However, it just happens that Z STREET refers to that area as “the disputed territories.”

Gordon:  It is not only Z Street who does. It happens to be UN Resolution 242 completed in November 1967, with the assistance of a British Diplomat, Lord Carrington, and an American, Amb. Arthur Goldberg, that said "the disputed territories" has to do with crown lands which harkens back to the dissolution of the Ottoman Empire in 1923.

Marcus:  That is indeed true, and it is one of the reasons why I use the term “disputed territories.” However, it also seems to me to be the most correct and least politically charged term to use which is why Z STREET uses it, and it is what appears on the Z STREET website.

As I said, “occupied territory” is what is used by people who are hostile to Jews living in that land. Given that is the term used by the IRS to create the category, the IRS itself was making a political statement which again, is completely inappropriate. 

The other thing that is really interesting and important for the Z STREET lawsuit is, guess what word doesn't appear anywhere on these documents? The word “terrorism,” even though Mr. Waddell said in a sworn statement that the reason Z STREET’s application was sent for additional scrutiny was because it might be that Z STREET was providing resources to terrorists in Israel. That term appears nowhere at all on the IRS charts. And the group in this one category was sent to in the IRS TAG Group 7830.

I went through all 14 documents and guess what? This Occupied Territory Advocacy Group only shows up on the first three of 14 BOLO (Be On the Look Out) IRS documents that were released on June 24th. Those documents were from August 12, 2010, November 9, 2010, and November 16, 2010. The next BOLO document is dated February  2011. In the February 2011 BOLO document, there is no longer a category called “Occupied Territory Advocacy,” nor is it on any of the subsequent 10 IRS BOLO documents. Z STREET was informed in an IRS court filing in January 2011 that because Z STREET brought this lawsuit against it, the IRS put our application on hold. There was no activity. Our application was frozen and that would be why there is no “Occupied Territory Advocacy” category once the IRS took that action against Z STREET. It is a little complicated but I think the main point, here, is that the IRS is not telling the truth. Either they didn't tell the truth in sworn statements submitted as part of the Z STREET litigation, because, in that statement Mr. Waddell claimed that Z STREET’s application was pulled because we might be “funding terrorists.” Yet in the documents produced to the IRS, and which the IRS never thought would see the light of day, potential funding of terrorism is not the reason why the application of any organization was pulled. Was the IRS misrepresenting what it was doing to Congress when it provided Congress with these BOLO documents?  Either the truth was told in the court filing in Z STREET, or the truth was told to Congress, or it wasn’t told in either case. However, we do know it could not have been told in both the court filings and in the documents turned over in the IG’s investigation. All of these possibilities are very bad. 

Gordon:  Right.

Marcus:  Maybe they weren't telling the truth to the three branches of government, Executive, Judiciary and the Congress. 

Gordon:  Doesn’t that amount to treble perjury in this regard?

Marcus:  If the IRS made misrepresentations to the Treasury Department’s Inspector General and to the various Congressional Committees that is very serious. What is also serious is that the mainstream media unlike the NER, has read this and said, “oh, they also targeted Progressives.” There is not a problem here. Yet another bizarre factor is that Danny Werfel, who is now the Acting IRS Commissioner, said during a conference call with certain members of the media, “look, like there was never any real problem. You know, mistakes were made but nothing inappropriate happened.” I'm sorry, Werfel is now where the buck stops and he doesn't get to say I looked into it. He doesn’t get to say, “I know nothing happened, move along.” No he is the defendant now. His word is not the end. He also said that Progressives were targeted. We now know from the Inspector General they were not. He also said “Israel” and “Occupy” were words used to create categories. The word Israel never occurs in any of these documents.   

I hope that the American people have the stamina to stick with this because something really, inappropriate was going on at the IRS. As you know, Jay Sekulow from the American Center for Law and Justice has brought a number of cases and there are some people who are saying “oh Congress, they don't know how to ask questions. They are never going to get to the bottom of this.” And it is really scary reading the transcripts of the hearings because it's amazing to read what they allow to go by. As a lawyer how could you just let some of these answers go by? And yet, outrageous answers were given, and the members of Congress respond with, “thank you,” and move on to the next question. There was just a whole goldmine right there waiting for someone to ask the right follow up questions, but no one did. On the other hand, going to the courts even after filing our lawsuit in August of 2010 and after three years, we just had our first hearing and we still don't have an answer yet from the IRS. They filed a Motion to Dismiss. Their Motion to Dismiss is what a defendant says to a court to suggest that the court should just throw out the lawsuit. They shouldn't be taking up your time. 

Gordon:  But then again they have filed on the wrong basis given your claim.

Marcus:  There are affidavits now in this case which is really inappropriate at the Motion to Dismiss stage of a lawsuit they started. We hope that people understand that once any part of the government is able to shut down people because of their viewpoints we are marching down the road away from our country of freedom and liberty and the Bill of Rights and it is really serious.

Gordon:  There is a little side show that I recall reading about and it had something to do with The Daily Beast complaining about Z STREET promoting a New York Mets “thank you”? What is that all about? 

Marcus:  It's so delicious. It's beyond belief. A reporter from The Daily Beast (formerly Newsweek) contacted us and said she had some questions, based on something that was in our tax exemption application and supplemental materials. In June 2010 we filed hundreds of pages of documents in response to questions from the IRS. It included everything we had ever posted on our website or sent to anyone. The reporter had apparently gone though all these hundreds of pages. The one she seized upon, I suppose that is because it was as close as she could find of Z STREET providing anything resources to Israel, was when we had this very sweet, little posting saying, “write a thank you letter to the New York Mets. Yes, we are not kidding. Really, send a letter to the New York Mets.” We posted that because a group called the Hebron Fund - which, by the way, is an IRS approved 501(c)(3) organization - was having a fundraiser at Shea Stadium. Virulently anti-Israel groups were trying to pressure the Mets and its owners and anybody else they could contact to prevent the Hebron Fund from having their fundraising dinner. You see, Hebron is in a part of Israel which is in the disputed territories. I put up on the Z STREET website, “write a thank you letter to the New York Mets and here is their address and this is why you should.” I also posted everything that these anti-Israel groups had sent around. I wrote, “go, and show your support. Go to the dinner, show them that you care.” The focus of the website posting was literally to write a thank you note to the New York Mets.  And that apparently is as close as The Daily Beast reporter could find of Z STREET supporting terrorism! So perhaps even the New York Mets are going to have their own category in the BOLO lists for the IRS.

Gordon:  Sounds over the top.

Marcus:  It's so far over the top. You know, you just really have to laugh. It would be impossible if someone told you there is no way writing a thank you note to the New York Mets could land an organization on the terrorism list of the IRS, but what can you say?

Gordon:  How much cable TV news coverage has there been on the specifics of the Z STREET case and the D.C. Court hearing? 

Marcus:  For about two straight weeks Fox News had our issue on various programs, they had some discussion about the Z STREET case. None of the other mainstream did, although we were contacted by CNN and NBC. However, they decided not to touch this issue. They were not interested in it. Shalom TV covered it and that was pretty much it.

However, there has been other media coverage. Some of it good, as with the Washington Free Beacon, and FrontPageMagazine. However, the Jerusalem Post which one would think might possibly be sympathetic to an organization that has been discriminated against for supporting Jews living beyond "the green line" had a journalist named Michael Wilner, who wrote a story after the Inspector General's first report. He came out saying “there was no mention of Israel in there. They didn't go after the Israel groups. Whatever pro-Israel groups are complaining, there's no merit to it.” He was wrong. The mandate of the Inspector General was to look into the politically conservative groups within a particular time frame and that is why we only showed up in the documents that were released in late June 2013. None of those other entities were within the particular mandate of the Inspector General. Mr. Wilner’s misinformed report was The Jerusalem Post’s only contribution to the cause. The New York Times wrote a front page article saying that the Israel group that was targeted was this tiny Minnesota Break the Bonds group which is a BDS Group. There is no way the BDS Group describes itself as dealing with "the disputed territories" I mean, it's just ridiculous.

Gordon:  I agree.

Marcus:  There is one more. The Forward wrote about it. The Forward wrote that Ameinu, which is another left organization, has been suffering from the same thing that Z STREET is complaining about. No, Ameinu has had a matter dealing with the IRS because they switched from one category, a 501 (c) (4) to a 501 (c ) (3).  Their case is not like ours and clearly Ameinu wasn’t described as advocating for the “disputed territories.” However, that is what The Forward came up with. Mainline Jewish organizations, as I said earlier, have not been at all supportive either. The American Jewish Committee had a remark in the press, something like, “well if they hold the Arab groups for extra scrutiny, they have to do it to the Jews, also.” Great. Thanks. When we first filed the lawsuit in August 2010 a former IRS Commissioner who was interviewed  by Politico was Sheldon Cohen. He was quoted by a reporter saying, “they [meaning Z STREET] screamed rape before the dress was even lifted.”

Gordon:  That's pretty obnoxious.

Marcus:  Outrageous! That has rankled me for so long. Why be a reporter if you can’t understand the facts of a case? Why give out quotes if you don’t know what you are talking about? Distinguishing between 501(c)(3)’s and 501(c)(4)’s, or understanding that some groups don’t give money to anybody, and some groups don’t do any lobbying or engage in electioneering - Z STREET did neither - you have to get it straight or don’t write or talk about it.

Gordon:  Digging deeper Lori, do you believe you were victimized because the Obama Administration had tilted towards J Street? 

Marcus:  Z STREET was created in response to all those groups like J Street claiming to be pro-Israel, but were really hammering for Israel by demanding the creation of a Palestinian state. That was why we felt the real need for actual education, clear information.

However, J Street issued a statement in the summer of 2010 echoing articles that had been in The New York Times and The Washington Post. Those articles and J Street’s public statement suggested that it might be inappropriate for groups which funds entities beyond ‘the green line’ to get 501(c) (3) status, because it was interfering with the Obama Administration. Did appointees under Obama given a free hand to help set policy for the IRS take their policy cues from The New York Times? The last time I checked, The New York Times doesn't issue IRS regulations so no one in the IRS is supposed to be taking direction from the New York Times nor from J Street, nor from The Washington Post. IRS employees are only supposed to be following the Internal Revenue Code, any rules and regulations from Congress or the Treasury Department. So was there a problem? Were people given access to decision makers? Were people making decisions that shifted the orientation of the IRS in a way that penalized inappropriately, and unconstitutionally, those who simply do not agree with this Administration's public policy. A policy that settlements beyond "the green line" are the obstacle to peace in the Middle East and that unless we create a Palestinian state immediately we're never going to have peace. Z STREET is definitely in the disagreement category with that concept.

Gordon:  What do you believe would be the best outcome of the D.C. Federal Court after its review of the various filings in terms of handing down a ruling in this case?

Marcus:  Naturally, I think the court should sign the proposed Order that we submitted and provide us with access to what is called discovery. Meaning we are permitted to seek information about how the IRS set about creating this policy, who formulated it, who approved it, who knew about it, who had to apply it, to whom was it applied. That is what we need to find out in order to learn how the IRS came to create policies that are not just inappropriate, not just mismanagement, but which constitute violations of the U.S. Constitution. We need to find out because unless we do, there are going to be greater and greater restrictions on fundamental freedoms.

Gordon:  Can you tell us what happened in court on July 19, 2013?

Marcus:  As I mentioned before, the IRS continues to mischaracterize Z STREET’s claim, and that continued in the court hearing. As Alana Goodman of The Washington Free Beacon noted in an article she wrote about the court hearing, this behavior finally prompted the Judge to snap: “That’s not what they want.”

The IRS actually offered to waive the timing requirement so we could transform our case into one for a determination ruling by the court. What does that tell us? That tells us that the IRS is desperate to prevent Z STREET or anyone else, for that matter, from finding out exactly what the IRS did in crafting a policy that led them to set up a category called “Occupied Territory Advocacy.” Or any other policies which led them to unfairly treat entities with political views which differ from the Administration’s.

The other really interesting point to come out during the hearing was in response to probing by Judge Jackson, the IRS came right out and said that while Z STREET is trying to create a “perfect” remedy, we should be satisfied with a “good enough” remedy. In other words, we can find out “yes” or “no,” but not “how” or “why.” Really? Since when is “good enough” the right answer when someone claims a constitutional violation?

Gordon:  We await Judge Brown’s ruling in Z Street v Commissioner Shulman and hope that you will be granted discovery. I want to thank you for this engrossing and riveting interview. It is perhaps the first time that all of the facts and nuances in this matter have been disclosed.

Marcus:  I think that's true Jerry and for that I thank you very much. 

Gordon:  Thanks again Lori. 

 

Also see Jerry Gordon's collection of interviews, The West Speaks.

 

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