Originally published on Forbes.com.
A lawsuit seeking to force the IRS and other Treasury departments to investigate not for profits backing Israeli settlements has foundered on the rock of standing. Judge Randolph Moss of the United States District Court for the District of Columbia recently ruled in the case of Aulhawa et. al. v. Dept of the Treasury (Sorry, can’t find a free link). Susan Abulhawa, author of Mornings in Jenin explained her motivation for participating in the case in the second amended complaint. Buried in the explanation is the reason why the case was doomed.
The trajectory of my life has been determined and shaped by Israel’s theft of my home and heritage ; by Israel’s dislocation of me, from my birthright to life-long exile. I want accountability and restitution from those who dismantled my family, stole my inheritance, claimed my history, and made of me a placeless person…I want a court, somewhere, somehow, to declare that it was not okay to remove me from the only place where I belong in the world, and replace me with foreigners insistent upon an entitlement to have an extra country; to affirm that I am a native of Jerusalem on the Mount of Olives where my family has dwelt for centuries upon centuries, and that as an indigenous person who belongs to that patch of earth, it is my birthright to inhabit it still as all my ancestors did before me. I want a court, somewhere, somehow, to hold accountable those who have financed my pain of dispossession and exile ; to hold accountable the financiers of Israel’s wholesale theft of another people’s historic, material, spiritual, and emotional presence in the world. (Emphasis added)
Relief Requested
The complaint requested that the court order Treasury to investigate any and all tax-exempt entities based in America which transmit $20,000 or more on an annual basis to any country and where appropriate revoke exempt status, criminally prosecute any tax fraud and money laundering uncovered and initiate an investigation of all of the claims of financial sponsorship outlined in the complaint.
Causality
Although many of the plaintiffs were not alleging injuries to themselves, the government conceded that Susan Abulhawa and five other were alleging specific injuries – the loss of real property. That is not enough for standing though. There is also the question of causation:
“laintiffs cannot establish a causal link between an alleged injury and the challenged conduct;” that is, they have not alleged facts sufficient to “show that the alleged criminal activity” carried out by the U.S.-based nonprofits in coordination with Israeli settlers “would not have occurred but for the grant of, and failure to investigate or revoke, tax-exempt status by the United States.
Showing how long this all has been going on Judge Moss cited Khalaf v Regan that concerned requests to challenge the tax exempt status of organizations supporting Israeli settlement in the West Bank. That case was decided in 1985.
Redressability
The complaint also failed on the grounds of redressability.
For those plaintiffs alleging past injuries—for example, the loss of property already taken or a physical assault already suffered—an order from this Court compelling Defendants to investigate the § 501(c)(3) status of U.S.-based charities will do nothing to redress their alleged injuries. Even if Defendants were to revoke the § 501(c)(3) status of U.S. entities, if any, found to have financially supported illegal activity in the West Bank or East Jerusalem, those actions would not make Plaintiffs whole; neither the investigation, the revocation of tax-exempt status, nor even the prosecution of U.S. nonprofit organizations would result in the return of any illegally obtained property in the West Bank or East Jerusalem or in the payment of damages for physical assaults that occurred in those territories.
So you could read Judge Moss as responding to Susan Abulhawa’s plea for a court somewhere, somehow to declare that what happened to her was not right with “Not this court here. Not this way.”
It is interesting to compare this litigation to the ongoing lawsuit by Z Street, which has become part of the IRS scandal narrative, alleging that the IRS was discriminating against pro-Israeli charities in granting exempt status. Most of us are used to the idea that we can’t please everybody. When it comes to exempt function, though, it seems the IRS can’t please anybody.
Nothing New
I asked Paul Streckfus of the EO Tax Journal for his thoughts on the decision.
I don’t see anything new here. The plaintiffs have no standing to bring a court action against the IRS. The usual remedy is to pressure Congress to hold a hearing or ask the White House to intervene, not going to happen here!
Other Coverage
You can find a lot of coverage of the ongoing litigation. An example would be Why We’re Suing the US Treasury Department by Susan Abulhawa. Then there is “Tax day is annoying for Americans, and hell for Palestinians” by John Fearey. I haven’t found anything on the decision, though, possibly making this one of my rare instances of breaking a story.
I should note that when standing is at issue what the plaintiffs allege is taken as true for the sake of argument so there will be nothing on either side of the litigation contesting their claims.