Menu
U.S. Court of Appeals Rules in Favor of Pro-Israel Organization in IRS Discriminatory "Israel Special Policy" Case
Caplin & Drysdale

U.S. Court of Appeals Rules in Favor of Pro-Israel Organization in IRS Discriminatory "Israel Special Policy" Case

Date: 6/23/2015

FOR IMMEDIATE RELEASE

CONTACT: Charles M. Ruchelman — 202.862.7834 / cruchelman@capdale.com 

WASHINGTON, DC — June 23, 2015: On June 19, 2015, the U.S. Court of Appeals for the District of Columbia permitted a lawsuit to proceed against the Internal Revenue Service (IRS) for its alleged anti-Israel discriminatory practices (See Attached Ruling).  The organization, Z Street, a nonprofit organization "devoted to educating the public about Zionism" and "the facts relating to the Middle East," applied for Federal tax exempt status under section 501(c)(3) of the Internal Revenue Code.  When an IRS agent allegedly revealed that the IRS had an "Israel Special Policy" meant to apply additional scrutiny to an organization holding "political views inconsistent with those espoused by the Obama administration," Z Street brought a case in U.S. district court seeking relief from the IRS's alleged unconstitutional delay in reviewing its application and applying stricter scrutiny than to other tax exempt applicants.

"What strikes me as unusual in this case," said Charles Ruchelman, a tax attorney with the law firm of Caplin & Drysdale in Washington, D.C., "is the awkward tax-related defenses that the IRS invoked to defeat Z Street's claims as well as the unusual decision to appeal the pro-Z Street ruling by the U.S. district court."  Not only did the IRS delay ruling on Z Street's tax exempt application, but it filed a motion to dismiss the case at the district court level, and then immediately appealed the adverse ruling to the court of appeals.  "Due to all these delays," Ruchelman said, "Z Street has not yet had its day in court to determine whether these troubling allegations are true."   


Like the U.S. district court, the U.S. Court of Appeals ruled against the IRS.  The court said that the IRS could not avoid Z Street's action based on the Anti-Injunction Act because Z Street's claims are not trying to enjoin the assessment or collection of any taxes.  Rather, Z Street is seeking a non-discriminatory review of its Federal tax exemption application.  Ruchelman said that the "First Amendment prohibits the IRS from discriminating based on viewpoint."
 
The case is Z Street v. Commissioner of Internal Revenue, U.S. Court Appeals for the District of Columbia, No. 15-5010. For more information, please contact Charles M. Ruchelman at cruchelman@capdale.com or 202.862.7834.


________________________________________________

About Caplin & Drysdale
Having celebrated our 50th Anniversary in 2014, Caplin & Drysdale continues to be a leading provider of legal services to corporations, individuals, and nonprofits throughout the United States and around the world. We are also privileged to serve as legal advisors to accounting firms, financial institutions, law firms, and other professional services organizations.

The firm's reputation over the years has earned us the trust and respect of clients, industry peers, and government agencies. Moreover, clients rely on our broad knowledge of the law and our keen insights into their business concerns and personal interests. Our lawyers' strong tactical and problem-solving skills -- combined with substantial experience handling a variety of complex, high stakes, matters in a boutique environment -- make us one the nation's most distinctive law firms.

With offices in New York City and Washington, D.C., Caplin & Drysdale's core practice areas include:
For more information, please visit us at www.caplindrysdale.com.
Washington, DC Office:
One Thomas Circle NW
Suite 1100
Washington, DC 20005
202.862.5000
New York, NY Office:
600 Lexington Avenue
21st Floor
New York, NY 10022
212.379.6000

___________________________

Disclaimer
This communication does not provide legal advice, nor does it create an attorney-client relationship with you or any other reader. If you require legal guidance in any specific situation, you should engage a qualified lawyer for that purpose. Prior results do not guarantee a similar outcome.

Attorney Advertising
It is possible that under the laws, rules, or regulations of certain jurisdictions, this may be construed as an advertisement or solicitation.
© 2019 Caplin & Drysdale, Chartered
All Rights Reserved.

Related Professionals

Related Practicen Area(s)

View our non-mobile site Menu