A group of seven liberal Democrats in the House of Representatives recently sent a letter to Treasury Secretary Janet Yellen asking her to review (and calling on her to revoke) the tax-exempt status of American charities that provide support to Jewish people living in the State of Israel, including in the disputed territories of Judea and Samaria.
In addition to spreading baseless lies against the Jewish state, the letter was also egregiously wrong on all relevant laws.
Section 501(c)(3) of the Internal Revenue Code exempts from taxation entities organized and operated exclusively for certain purposes, including charitable and educational purposes. In three Revenue Rulings, the IRS has set forth additional requirements stating that activities of a 501(c)(3) organization must not be “illegal, contrary to a clearly defined and established public policy, or in conflict with express statutory restrictions.” In a few civil rights cases, courts have compelled the IRS to examine and/or revoke the tax-exempt status of a charitable organization that the court determined was engaged in activities that violated the laws or Constitution of the U.S. In no case has the IRS ever been forced to examine and/or revoke an organization’s tax-exempt status based upon alleged violations of “international law.”
Charitable organizations that provide support to Jewish people living in the State of Israel, including in the disputed territories, clearly meet all tax exemption requirements. They are engaged exclusively in charitable or educational activities which do not violate any U.S. laws or clearly defined and established public policies. The public policy doctrine means that the “purpose must not be so at odds with the common community conscience as to undermine any public benefit that might otherwise be conferred.” Bob Jones University v. United States, 461 U.S. 574 (1983). It has nothing to do with foreign policy positions. And even if it did, the authors are wrong about the U.S. position on settlements. The U.S., officially, does not consider Israeli settlements to be in violation of or inconsistent with international law. And- despite what the authors of the letter might wish- the United States does recognize Jerusalem, which is in the West Bank, as the capital of the State of Israel.
The letter’s non-sequitur logic is also legally nonsensical. As Eugene Kontorovich has noted, even if there were a U.S. policy that considered settlements illegal, that policy would have nothing to do with U.S. citizens giving charity to the people in those communities, which is what these organizations do. The alleged “violation” of international law would be on the Israeli government, not the settlers themselves, and certainly not the people providing humanitarian aid to those who live there.
This is not also the first time that someone has tried this very tactic in these very circumstances. Had the letter’s authors done only the barest minimum of research, they might have found the two previous cases in which plaintiffs sought the same outcome by alleging that a charitable organization’s support for Israeli settlements violated U.S. and international laws. Both of those cases were dismissed. In Khalaf et al v. Regan, et al, (D.C. Cir. 1986), the Court determined that the alleged harms could “neither be rationally attributed to benefits conferred by U.S. tax laws nor is it any more likely to be redressed by their elimination.” The Court of Appeals applied the same reasoning in Abulhawa, Susan, et al v. U.S. Dept of the Treas, et al, (2017, DC Dist Col), finding that the claims were “not plausible.” And when the IRS did once try to illegally impose heightened scrutiny to an application for tax-exempt status received from an organization connected to Israel because it dealt with “disputed territories,” the agency was forced to issue an official apology through the Department of Justice.
The lawmakers who wrote this letter were either intentionally misleading or inexcusably ill-informed; either way, they should be ashamed of themselves for trying to take money away from (among others) charities that give support to ALS patients, disabled children, abused women, depressed mothers, at-risk youth, and other families and individuals in need of medical, nutritional, and financial assistance, simply because they are Jewish. Note that the authors have no problem with charities supporting Palestinians living in these same areas.
Of course, it is not surprising to find rank antisemitism coming from this group. Just this week, Rashida Tlaib dog whistled that it is the same people “behind the curtain” who are “making money” preventing a free Palestine and exploiting “the rest of us” poor Americans. At the same time, Cori Bush gave a bizarre speech that demonized Israel and also blamed American support of the Jewish State for the homeless problem in St. Louis. But what is interesting is that their ridiculous tax letter may have actually raised some problematic questions for one of their favorite causes: the antisemitic Boycott, Divestment, and Sanctions (BDS) movement that all of the signatories actively support.
In 2016, the House Foreign Affairs Committee Subcommittee on Terrorism, Nonproliferation, and Trade and the Subcommittee on the Middle East and North Africa heard testimony from Jonathan Schanzer, a former terrorism finance analyst for the United States Department of the Treasury. He told Congress that Americans for Justice in Palestine Educational Foundation (AJP), a nonprofit that fiscally sponsors many US-based BDS organizations, has troubling ties to several terrorist financing organizations. Additional reporting has revealed that the US Campaign for Palestinian Rights, a nonprofit umbrella group for American BDS organizations, funnels money to U.S. designated terrorist groups that specialize in killing Jews and that call for Jewish genocide, including, for example, Hamas.
Providing support for terror would obviously be against the law and public policy. Based on their clear concern for the abuse of the federal tax system, it should be safe to assume that all of these Members would readily agree that the tax-exempt status of these BDS groups should immediately be investigated. In the meantime, they seem to have no problem with charities providing humanitarian aid to people in China, Syria, Iran, and many other human-rights-abusing countries. Only Jewish people in the Jewish state are worthy of their condemnation- and their amateurish vigilance.
There is, of course, a word for that.
• Dr. Mark Goldfeder is Special Counsel for International Affairs at the American Center for Law and Justice