The IRS has not caught many breaks lately and defending itself in court in a suit brought by the pro Israel group Z Street isn't likely to go well either. When Z Street filed for tax exempt status the IRS said that the agency had singled it out for special scrutiny because its pro-Israel positions conflicted with Obama administration policies. Now Z Street is demanding to know exactly what guideline the IRS used and are those guidelines constitutional.
“There clearly is a policy—it’s just they haven’t had the chutzpah to say out loud what it is,” said Z Street attorney Jerome Marcus.
The IRS says that Z Street must first resolve its exempt status before it can revel its policy. "The review of the process can only take place if Z Street wanted to put its money on the line” and get a court or government ruling on its tax-exempt status, said U.S. attorney Andrew Strelka.
“We’re not seeking tax-exempt status in this case. We are seeking an untainted process,” said Marcus. “What is the policy that the IRS has been following since 2010, and is that process constitutional?” He added the group was entitled to a decision on the constitutionality of the IRS’ policy now, regardless of the resolution of its tax-exempt status application.
Judge Ketanji Brown Jackson expressed skepticism of the IRS position and will decide if the IRS must spell out its policy.