Zionist Group May Sue IRS for Assessment Delay

     (CN) – Zionist organization Z Street can sue the Internal Revenue Service for allegedly delaying its application for nonprofit status for political reasons, the D.C. Circuit ruled.
     According to the ruling announced June 19, Z Street is devoted to “tirelessly, fearlessly, defending the Jewish state.”
     It applied for 501(c)(3) tax exemption in 2009, but claims that the IRS has delayed reviewing its application under an “Israel Special Policy,” which allegedly places greater scrutiny on organizations holding “political views inconsistent with those espoused by the Obama administration.”
     This scrutiny results in such applications “taking longer to process than those made by organizations” with political views in line with those of the administration, in violation of the First Amendment, Z Street says.
     IRS Commissioner John Koskinen moved to dismiss the suit, arguing that the Anti-Injunction Act bars the suit. He also denied the existence of an “Israel Special Policy,” and said Z Street’s application had not been delayed by heightened scrutiny.
     But a federal judge ruled against the agency, finding that Z Street’s suit is not related to the “assessment or collection” of taxes, and therefore properly states a claim for injunctive relief.
     The organization “seeks only to have a ‘constitutionally valid process’ used when its application for Section 501(c)(3) status is evaluated – nothing more and nothing less,” the judge said.
     The D.C. Circuit affirmed that ruling on Friday.
     “The Act does not apply in situations where the plaintiff has no alternative means to challenge the IRS’s action or where the claim has no ‘implication[s]’ for tax assessment or collection,” U.S. Circuit Judge David Tatel said, writing for the three-judge panel.
     Z Street is not challenging its tax liability. The “only thing we’re suing about,” Z Street’s counsel told the court at oral argument, “is delay.”
     It is clear that any delay by the IRS based on plaintiff’s political agency would be unconstitutional, the panel said. As Z Street has no administrative recourse for the agency’s alleged wrongful action, its litigation in D.C. federal courts may proceed.

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