New Documents Reveal IRS Gave False Testimony in Z STREET Lawsuit

IRS documents recently made public by Congress reveal that claims made under oath by IRS employees in the Z STREET case were false and further reveal, in the words of the IRS and in documents produced by the IRS, that Z STREET’s claim against it is correct: the IRS engaged in viewpoint discrimination against Z STREET, a pro-Israel organization, for holding views that contradict those of this administration’s.

In what was clearly an effort to prevent the growing scandal’s political bulls eye being painted on the White House, the ranking Democrat on the House Ways and Means Committee, Sander Levin (D-MI), released a series of documents produced by the Internal Revenue Service. Rep. Levin said he believed these materials proved the IRS had not only targeted conservative groups, but that it had also gone after “progressive” groups, i.e. liberal ones. Presumably, his goal was to prove that the IRS was not selective in its misbehavior, but had been an equal opportunity offender. Levin believed that the 14 IRS documents which he released on June 24, 2013, made this point, and he then went on the offensive, lambasting the Treasury’s Inspector General, for failing to raise this “fact” in his report.

Sympathetic media outlets immediately ran top-of-the fold headlines proclaiming, based upon statements made in a conference call given by Danny Werfel, the new Acting IRS Commissioner, with select members of the media, that the IRS had not only used the words “Tea Party” as a search term to target organizations for additional scrutiny, but that it had also targeted “progressives,” “Israel” and “Occupy.”

But a laborious review of the IRS documents released by Levin, as well as a lengthy response by the Inspector General to Levin’s scathing letter, revealed that those documents did not prove what Levin and others hoped was being proved.

In fact, while the term “progressives” was found as a category on several of the documents, just a few minutes’ review revealed that nothing was done with the organizations with that term in their title. In fact, the Tab under which that term appears is “Potential Abusive Historical,” and the category had been moribund. But what was bothering the IRS was that several organizations which had sought one kind of tax exempt status, should probably have been seeking a different one, as the organizations were engaged in political activity, therefore more appropriately a 501(c)(4) and not a 501(c)(3) designation.

But the 14 IRS documents do reveal, and they do it categorically, and they constitute an admission on the part of the IRS, is that the Service was looking at certain “Israel connected” organizations and making a distinction based upon the organization’s political/ideological viewpoint. And that is the very claim made by Z STREET in its lawsuit brought against the IRS in August, 2010, and in which there is a hearing in federal district court in Washington, D.C. this Friday.

On Wednesday, July 17, a document was filed with the D.C. District Court, the Motion of Plaintiff Z STREET to Supplement the Record to Include Documents Recently Released by Defendant Internal Revenue Service.

The documents basically state:

The Manager of the IRS Touch and Go (“TAG”) Group stated under oath, after Z STREET brought its lawsuit against the IRS for viewpoint discrimination, that he concluded, based upon Z STREET’s application for tax exempt status and other submissions that Z STREET’s file should be sent to the TAG Group, #7830.

The TAG Group manager based his decision upon his view that Z STREET might be engaged in the funding of terrorism because “there is a higher risk of terrorism in Israel.”

HOWEVER:

• Nowhere in any of the 14 documents is any organization’s application referred to any group for anything related to the potential funding of terrorism.

• Nowhere in any of the 14 documents is there even any mention of terrorism.

• The 14 IRS documents released by the House Ways and Means Committee contained a category, created by IRS employees, entitled “Occupied Territory Advocacy.”

• The category for “Occupied Territory Advocacy” had only one organization referred to it, and the notice to IRS inspectors to “Be on the Look Out” for groups under this category was sent on August 10, 2010, just days after Z STREET’s file was reviewed, and a determination was made to send the file to the TAG Group, according to IRS statements.

• The sole entity in the “Occupied Territory Advocacy” category was referred to TAG Group #7830, which is where Z STREET’s file was sent, according to IRS statements.

• The “Occupied Territory Advocacy” category appeared on the August 12, 2010, the November 9, 2010 and the November 16, 2010 IRS documents released on June 24, but it was not present in the next document, dated February 2, 2011, or any of the subsequent 10 IRS documents.

• Z STREET’s application was “put on hold” by the IRS because it brought its lawsuit against the Service, as the IRS explained in a court filing in January, 2011. Once Z STREET’s application was no longer under consideration, the category disappeared.

In other words take one wild guess who the one group filed under “Occupied Territory Advocacy was?  Z STREET?

The creation of a category for a purely ideological viewpoint is a violation of the IRS mandate, and its use to make decisions about whether to approve or deny tax exempt status on the basis of an applicant’s viewpoint is unconstitutional. But President Obama doesn't like to allow the constitution to get in the way a of a good abuse of power.