On Tuesday, a federal judge refused to dismiss a suit brought by a pro-Israel group against the IRS.  In her ruling, Judge Ketanji Brown Jackson demanded that the agency stop “attempting to thwart this action’s advancement,”  and ordered the IRS to respond to the complaint within thirty days.

The Philadelphia-based group, Z Street, applied for tax-exempt status in 2009 and the IRS responded slowly. In 2010, Z Street filed a lawsuit against the IRS. When asked why the application had not been processed, an attorney for the IRS responded that its application had been sent to a “special unit… to determine whether the organization’s activities contradict the Administration’s public policies.” The special unit was referred to as the “Touch and Go” division or TAG. Later an IRS manager acknowledged that pro-Israel groups were getting special scrutiny:

In response to Z Street’s lawsuit, an IRS manager acknowledged that applications mentioning Israel were getting special attention.

“Israel is one of many Middle Eastern countries that have a ‘higher risk of terrorism,’” wrote Jon Waddell, manager of the IRS’s Exempt Organizations Determinations Group. “A referral to TAG is appropriate whenever an application mentions providing resources to organizations in a country with a higher risk of terrorism.”

McClatchy reported on the decision by Judge Jackson:

Z Street alleges that the IRS violated the First Amendment when it implemented a policy that subjected Israel-related organizations that are applying for tax-exempt status to more rigorous review procedures than other organizations applying for that same status. Z Street calls this viewpoint discrimination. …

“Z Street merely asks the Court to require the IRS to go about it usual business of evaluating Section 501(c)(3) applications in a manner that comports with the Constitution,” [Judge] Jackson wrote, “The only matter at issue in the instant lawsuit is whether, in addition to evaluating Z Street’s activities as it would any other organization’s, the IRS may constitutionally apply a more stringent standard of review that is allegedly reserved for organizations whose activities relate to the promotion of Israel.”

Jackson’s ruling has no bearing on the final disposition of the case other than allowing it to proceed, but in the words of Lori Lowenthal Marcus, president of Z Street, it is the “first substantive ruling by a judge in any action brought challenging the political impartiality of the IRS” in recent years.

A Wall Street Journal editorial today observes (Google search terms):

This ruling will force the IRS to open its books on the procedures it used and decisions it made reviewing Z Street’s tax-exempt application, procedures it has tried to keep shrouded. As the case proceeds, Z Street’s attorneys can seek depositions from many who have been part of the larger attempt to sit on similar applications by other conservative groups.

[ Photo: Internal Revenue Service / WikiCommons ]