IRS flagging controversy may extend to pro-Israel groups

( The admission of a policy violation by the Internal Revenue Service (IRS), in which it flagged conservative political groups who used the words “tea party” or “patriot” in their applications for tax-exempt status for extra reviews during the 2012 election, has brought to light a similar episode involving a pro-Israel group.

The IRS seal. Credit: IRS.

Lois Lerner, head of the IRS division overseeing tax-exempt groups, made the revelation last Friday at an American Bar Association conference. She said the IRS asked conservative groups to list their donors, also a violation of IRS policy.

“That was wrong,” Lerner said, the Associated Press reported. “That was absolutely incorrect, it was insensitive and it was inappropriate. That’s not how we go about selecting cases for further review.”

Lori Lowenthal Marcus, president and founder of the pro-Israel group Z Street, wrote for The Jewish Press that the U.S. House Ways and Means Committee, which will be investigating bias at the IRS in light of the agency’s admission, “might want to ask the IRS whether their list of targets extended beyond political party discrimination.”

Z Street in 2010 filed a lawsuit against the IRS alleging that the group was told by an IRS agent that its tax-exempt application would receive “additional scrutiny” because Z Street is “connected to Israel.” The agent also told Z Street that the applications of other “Israel-related organizations” were assigned to a “special unit” in the Washington, DC office of the IRS to determine “whether the organization’s activities contradict the Administration’s public policies,” Marcus wrote.

The first hearing in this case, IRS v. Z Street is scheduled for July 2 in Federal District Court in Washington.

Posted on May 13, 2013 .