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U.S. President Barack Obama arrives to go to lunch at Nancy's Restaurant while vacationing on Martha's Vineyard with his family August 25, 2010 in Oak Bluffs, Massachusetts. The Obama's are heading into their last weekend on the island before returning to Washington on Sunday. UPI/Darren McCollester/Pool Photo via Newscom

The Internal Revenue Service has delayed approval of tax-exempt status for a private organization and is reviewing its educational work, telling a lawyer for the foundation that it must be examined by Washington because its activities may “contradict the administration’s public policies.”

The allegation is contained in a federal lawsuit filed in the Eastern District of Pennsylvania by Z STREET, a Merion Station, Pa., group that educates on the statehood and status of Israel.

“Not only is it patently un-American but it is also a clear violation of the First Amendment for a government agency to penalize an organization because of its political position on Israel or anything else,” said Z STREET president Lori Lowenthal Marcus, a former First Amendment lawyer.

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“This situation is the same as if the government denied a driver’s license to people because they were Republicans or Democrats. It goes against everything for which our country stands.”

Contacted by WND, IRS officials declined to comment on the publicly filed lawsuit or even say whether they would respond.

The complaint states that the organization was working with IRS Agent Diane Gentry, who had delayed a decision on its routine application for tax-exempt status for the educational organization.

“Agent Gentry further stated to counsel for Z STREET, ‘these cases are being sent to a special unit in the D.C. office to determine whether the organization’s activities contradict the administration’s public policies,’” the lawsuit reports.

Tax-exempt status routinely is granted to many types of organizations in addition to churches. Charitable, scientific, literary and education purposes all qualify under the IRS code’s Section 501(c)(3) and Marcus pointed out that the Council on American-Islamic Relations – which was an unindicted co-conspirator in the Holy Land Foundation terror financing case and lobbies heavily in Congress for its agenda – is granted the status.

Organizations not allowed to use the IRS code section are harmed because, donors are unable to deduct contributions from their taxable income, Z STREET argues in its complaint.

“The IRS’s refusal to grant tax-exempt status to Z STREET has inhibited the organization’s fundraising efforts, and therefore impeded its ability to speak and to educate the public regarding the issues that are the focus and purpose of Z STREET,” according to the lawsuit.

The organization submitted its application Dec. 29, 2009.

Marcus told WND that Z STREET is working to educate the mainstream media and other outlets and present accurate information about the status of Israel as a nation.

She said she would like to know about the special policy of reviewing applications of organizations concerning Israel to see whether they align with the Obama policy.

“We want to know who approved it, what’s the substance. Obviously we want to have it disappear,” she said. “It’s completely un-American.”

She said the organization has met all of the requirements to be granted tax-exempt status. But the approval was delayed because of a “Special Israel Policy that requires greater scrutiny of organizations which have to do with Israel, in part to determine whether they espouse positions on Israel contrary to those of the current administration.”

The organization affirms it is “a Zionist organization that proudly supports Israel’s right to refuse to negotiate with, make concessions to, or appease terrorists.”

“Z STREET’s positions on Israel and, in particular, on the Middle East ‘peace process’ differ significantly from those espoused by the Obama administration,” the organization said in a statement about the case.

The action names IRS Commissioner Douglas H. Shulman as defendant.

The group “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, 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.’”

“These statements … constitute an explicit admission of the crudest form of viewpoint discrimination, and one which is both totally un-American and flatly unconstitutional under the First Amendment,” the complaint explains.

In an earlier commentary on American Thinker, Marcus explained the group is based on “these ironclad positions: The right of the Jewish people to a state, and the right of Jews to live freely anywhere, including inhaling oxygen in areas the world insists are reserved for Arab Palestinians.”

It also “relish[es]” the terms “Jewish State” and “Zionism” and intends to circulate facts – “not deceptive ‘Palestinian’ narratives” – about the Middle East and Israel.

The organization reports members in more than 20 states and on five continents.

That “rising groundswell,” she wrote, “is in part a response to organizations whispering into the ear of this U.S. administration that pervert the meaning of ‘pro-Israel.’ Their ultimate loyalty is to left-wing principles including a secular Israel and tolerance of terrorism only when directed at Jews. They are ashamed of an avowedly Jewish state, yet completely comfortable with 22 Muslim ones, and are actively seeking the creation of a 23rd, based in Jerusalem, whose governing documents call for the destruction of Israel.

“The idea that weakening Israel, either because of ideological conviction, animosity towards a strong Jewish state, cowardice, or the grossly misguided belief that compromise or dialoging with committed terrorists will lead to Middle East or global peace, is obscene,” she wrote.

The lawsuit explains the website’s positions “are supported by research, original documents, facts, and opinions from recognized academic and other knowledgeable sources, which sources are provided in its materials and on its website, and therefore, Z STREET’s activities are educational and charitable in nature.”

The complaint explains the IRS agent “stated further that the method is not educational if it fails to provide: (a) a factual foundation for the viewpoint being advocated; or (b) a developed presentation of the relevant facts that would materially aid a listener or reader in a learning process. ”


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