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DOJ settles with non-profit company over suit alleging IRS inappropriately delayed tax-exempt status

By Mark Iandolo | Feb 8, 2018

WASHINGTON (Legal Newsline) — The U.S. Department of Justice announced Feb. 1 that it will settle with Z Street, a non-profit company that educates the public about Israel and Middle East-related issues, after the organization alleged the Internal Revenue Service (IRS) applied heightened scrutiny to its tax-exempt status because of any perceived connection to Israel.

“Tax exemption eligibility should be based on whether an organization’s activities fulfill requirements of the law, not a group’s policy positions or the name chosen to reflect those views,” said principal Deputy Assistant attorney General Richard E. Zuckerman in a statement. “The attorneys at the Department of Justice work hard to ensure that all Americans receive equal treatment under the law. Today’s settlement further illustrates this commitment.”

Under the terms of the settlement, the IRS will issue an apology to Z Street for delaying its processing of the group’s application for tax-exempt status. 

According to the Justice Department, this is the final settlement in a series of cases brought by groups alleging tax-exempt status delay because of inappropriate criteria such as names and policy positions.

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