An Eye on Pro-Israel Groups

IRS flagged terms related to Israeli settlements for special scrutiny

June 25, 2013

A watch list from the Internal Revenue Service listed "Occupied Territory Advocacy" as a criterion for flagging nonprofit organizations for further scrutiny, according to documents released by Democrats on the House Ways and Means Committee.

Pro-Israel organizations and groups that support the Israeli settlements have alleged that the IRS singled them out for additional scrutiny since 2009.

The watch list defines these groups as "Applications [that] deal with disputed territories in the Middle East. … Applications may be inflammatory, advocate a one-sided point of view and promotional material may signify propaganda."

"If you see these cases, please forward to the TAG Group, 7830," the document continues.

The "TAG," or "Touch-and-Go" group, is responsible for identifying groups that may be involved in terrorism, according to the IRS Tax Exempt Organizations Determinations group.

The criteria appear to have been added to the watch list on Aug. 6, 2010. That was one month after a July 5, 2010 New York Times front-page story that quoted Obama administration officials criticizing the tax-exempt status of groups that support the Israeli settlements.

White House-allied activist groups, including the American Arab Anti-Discrimination Committee (ADC) and J Street, also called on the IRS to investigate the tax-exempt status of pro-settlement organizations in 2009 and 2010.

A Washington Free Beacon investigation in May identified at least five pro-Israel organizations that were audited by the IRS in the wake of the campaign.

One of the pro-Israel groups targeted was HaYovel, a Nashville-based pro-settlement charity that was mentioned prominently in the New York Times article. Six months after the article appeared, HaYovel was audited by the IRS.

"We bookend that story. We were the first [group mentioned]. They really kind of focused on us," HaYovel’s founder Tommy Waller said in May. "Then six months later we had an audit."

"We 100-percent support Judea and Samaria, and Jewish sovereignty in that area, and the current administration is 100 percent opposed to Jewish sovereignty in that area of Israel," Waller added. "That’s why we suspected that we would have to deal with [an audit]."

A group called Z Street, run by Lori Lowenthal Marcus, first raised concerns that pro-Israel organizations were being targeted by the IRS in 2010.

In a lawsuit against the IRS, Z Street claimed its tax-exempt application was held up because it did not toe the Obama administration’s line on Israel policy.

According to the group, IRS official Diane Gentry told Z Street’s attorney that its application for tax-exempt status would be delayed, and that applications of similar pro-Israel organizations were assigned to "a special unit in the D.C. office."

Z Street’s problems with the IRS reportedly began before Aug. 6, 2010, the date "Occupied Territory Advocacy" appears to have been listed on the watch list.