Irs Pummeled by Court for Suggesting it's OK to Discriminate Against Pro-Israel Group

Chief Judge Garland to the IRS's lawyer: 'Go back and ask your superiors whether they want us to represent that the government's position in this case is that the government is free to unconstitutionally discriminate against its citizens for 270 days."

In a highly unusual public thrashing of a government lawyer for the Internal Revenue Service by the second highest U.S. court, the D.C. Circuit Court of Appeals, asked: “You don’t really mean that the IRS is free to discriminate against its citizens, do you?”

The judges asked this question several times in several different ways of the Department of Justice lawyer Teresa McLaughlin who had the misfortune of representing the IRS in a case filed against it by Z STREET*, a staunchly pro-Israel non-profit organization in a hearing on Monday morning, May 4.

Since August of 2010, the Z STREET case has been languishing in the U.S. court system. Z STREET sued the IRS because it learned from the IRS agent to whom its tax exempt application had been assigned, that its application would take some time to process because “the IRS had to give “special scrutiny to organizations connected to Israel,” and that the applications of such organizations “were sent to a special unit in Washington, D.C. to determine whether its activities contradicted the policies of this Administration,” according to its Complaint.

Z STREET sued the IRS for “viewpoint discrimination,” a violation of the U.S. Constitution. The claim is that the IRS did not provide Z STREET with a fair process, which is what it is now seeking, through this lawsuit.

Z STREET has made clear from the first document filed in this case and in every document filed over the past nearly five years of litigation that it was not seeking that the courts grant it a tax exemption (501(c)(3)), only that its application be afforded a Constitutionally fair process.

The IRS, in turn, has insisted in every one of its legal documents that Z STREET’s case should be dismissed because there is a statute, Sec. 7428 of the Internal Revenue Code, that allows it to bring a lawsuit seeking the tax exemption, which can be pursued 270 days after an application is filed if the IRS has not yet acted.

Last May the D.C. federal district court denied the IRS’s efforts to throw out Z STREET’s lawsuit, clearing the path for the critical phase of the lawsuit to begin: discovery, the portion of a lawsuit in which the parties have to truthfully answer questions under oath and must provide requested critical documents. At the 11th hour, the IRS filed a special kind of appeal, which the D.C. Circuit Appellate Court granted.

This Monday morning, the IRS’s lawyer had not gotten two sentences out of her mouth when Judges David Sentelle and David Tatel cut off the effort to once again mischaracterize the Z STREET claim and suggest that it should have pursued the Sec. 7428 option.

“That is an over broad characterization” of the claim, Judge Sentelle shot out, forcing the government lawyer to narrow the scope of the aperture, so that the goal of seeking a Constitutionally fair process was briefly acknowledged by McLaughlin. “Bingo!” Judge Sentelle exclaimed.

As the judges drew out McLaughlin’s grilling to more than twice the normally allotted time, the judges began to lose patience. Judge Tatel had to reassert the proper focus of the lawsuit: “Their [Z STREET’s] argument is this ‘Israel Special Process’ subjected them to a different standard, based on their viewpoint, subjecting them to a delay in the process. If they sue [later] for a [tax] refund that cannot remedy the delay.” In fact, he pointed out, “neither a refund nor a 7428 action could address that” discriminatory delay.

There was lots more pummeling of the government lawyer, as the Wall Street Journal pointed out repeatedly in its May 7 editorial, “The IRS Goes to Court” and subheadlined, “The Agency suggests it can discriminate for 270 days. Judges Gasp.”

At one point during the argument, Judge Sentelle interjected: “I’m going to ask you what may be an unfair question, but where is the process now?”

The government lawyer had to admit that the IRS placed a hold on Z STREET’s application because it sued the Agency, a gambit the court learned was purely discretionary, and is only available when an applicant commences litigation over the status of its application and not, as every judge who has thus far considered the matter has insisted is the case for Z STREET, for a lawsuit over the process of the application, not the result.

“You don’t want that to be our take away here, that the government’s position is the IRS is free to discriminate on the basis of viewpoint, religion, race, for 270 days?

“I think if I were you I would go back and ask your superiors whether they want us to represent that the government’s position in this case is that the government is free to unconstitutionally discriminate against its citizens for 270 days.

“I would be stunned if the current Attorney General agreed with that. Or the last Attorney General. Or the one before that, or the one before that. Or anyone. That can’t be the position. Now, do you want to think about it again, whether you really want that to be your position,” the Chief Judge stated.

In response, the lawyer for the IRS pointed out that many of her superiors were sitting in the courtroom, listening.

In addition to the drama of a federal agency essentially admitting its best argument was that it is allowed to discriminate against certain groups – in Z STREET’s case, a group whose views about Israel differ profoundly from this administration’s, the purely legal procedural claims made by the IRS were resolutely rejected by the court based on recent and conclusive precedents from both the D.C. Circuit appellate court (in a decision issued by the full court, not just a three judge panel) and from the U.S. Supreme Court.

“We’ve decided every issue before us today, against you,” Chief Judge Garland stated incredulously.

The court finished mopping up the floor with the IRS for the day when Judge Sentelle sought once again to elicit an explanation from the government for its conduct thus far towards Z STREET.

McLaughlin attempted to paint Z STREET as being in the wrong, because had it waited just 31 more days to file its lawsuit, it would be at 270 days and could have properly brought a 7428 action. Right, that’s the one that doesn’t apply, as the court had repeatedly explained to the lawyer, because Z STREET is not asking the court to grant it tax exempt status.

“And they’re years away from it now, due to the actions of the IRS,” he thundered.

Obama must be gone! destroyed.

Who will bell the cat?

Not happening. That cat's currently bell-proof and the opposing rinos are bell-less and ball-free.

(D) Maxine Waters: ‘Obama Has Put In Place’ Secret Database With ‘Everything On Everyone’
Wednesday, May 15, 2013 12:55

“The President has put in place an organization with the kind of database that no one has ever seen before in life,” Representative Maxine Waters told Roland Martin on Monday. “That’s going to be very, very powerful,” Waters said.
“That database will have information about everything on every individual on ways that it’s never been done before and whoever runs for President on the Democratic ticket has to deal with that. They’re going to go down with that database and the concerns of those people because they can’t get around it.
And he’s [President Obama] been very smart. It’s very powerful what he’s leaving in place.”

Maxine Waters is the U.S. Representative for California’s 43rd congressional district, and previously the 35th and 29th districts, serving since 1991. She is a member of the Democratic Party.

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