Thursday, May 29, 2014

Court Rejects Jurisdictional Defenses In IRS 501(c)(3) Policy Challenge

In Z Street, Inc., v. Koskinen, (D DC, May 27, 2014), the D.C. federal district court rejected a number of jurisdictional and procedural defenses raised by the Internal Revenue Service in a viewpoint discrimination suit brought by a conservative pro-Israel group challenging the IRS's "Israel Special Policy."  Plaintiff alleges that the IRS has a policy of sending applications by Israel-related non-profit organizations seeking 501(c)(3) status to a special unit in the D.C. office to determine if the organization's policies differ from those of the Obama administration. Applications by such groups are allegedly subjected to additional review procedures not applied to others. In rejecting the IRS's motion to dismiss, the court said:
Defendant struggles mightily to transform a lawsuit that clearly challenges the constitutionality of the process that the IRS allegedly employs when it determines the tax-exempt status of certain organizations into a dispute over tax liability as a means of attempting to thwart this action’s advancement. But the instant complaint, which in no way seeks an assessment of the taxes to be paid or even a determination of the Plaintiff’s Section 501(c)(3) status, is not so easily deterred.
[Thanks to Steven H. Sholk for the lead.]