Two years after filing a federal law suit in Philadelphia that claimed pro-Israel groups seeking nonprofit status were unfairly targeted by the Internal Revenue Service, Z Street may finally get its day in court.
The development came as the news that the IRS targeted conservative groups has roiled Washington.
In Z Street vs. IRS, a motion-to-dismiss hearing date has been set for July 2 in a federal district court in Washington, D.C. It has been more than a year since a Philadelphia court transferred the case to the nation’s capital. Federal Judge Ketanji Brown Jackson is now presiding over the case.
Lori Lerner, the head of the IRS’ tax-exempt division, recently acknowledged that 200 Tea Party and conservative groups were subject to additional scrutiny in seeking nonprofit status. The fallout has led to the forced resignation of the acting IRS chief commissioner, Steven Miller. Congressional Republicans have vowed to press the issue further and Attorney General Eric Holder has said the IRS may have committed civil rights violations.
Lori Lowenthal Marcus, president and founder of Z Street, said recent revelations about the IRS are directly linked to her own case.
“Many of the inappropriate actions of the IRS that have now come out in the open over the past several days are precisely the same ones we complained about,” Marcus wrote in an email.
Marcus said her organization has struggled to raise funds without tax-exempt status and is now in a “moribund state.”
On May 14, the chairman and ranking member of the House Ways and Means Committee wrote to Miller — before he resigned — asking for clarification on how the IRS dealt with Israel-related organizations.
“Media reports have detailed that the IRS conducted special reviews of organizations whose missions involve Israel,” wrote U.S. Rep. Dave Camp (R-Texas) and U.S. Rep. Sander Levin (D-Mich.) “Did the IRS undertake special reviews of these and other organizations whose activities contradict or are inconsistent with the administration’s policies? If so, provide all documents and communications related to these practices.”
David Stewart, an IRS spokesman, responded that “the IRS is not permitted to discuss a particular or specific taxpayer’s tax matter or their taxes based on federal disclosure regulations and federal law. Also we decline to comment because we do not comment on pending litigation.”
Marcus said there’s no reason to think that the granting of a hearing was directly related to the news out of Washington.
“I cannot believe the court was influenced by current events regarding the IRS,” she said. Marcus hopes the judiciary “remains free and fair.”