Jewish Group: IRS Targeted Us Because 'They Thought We Might Be Funding Terrorism

Lori Lowenthal Marcus, President of Z Street, appears on "On the Record." (Photo: Fox News)

Soon after the Internal Revenue Service admitted it had been targeting conservative organizations applying for 501 (c) (4) status around the 2012 election -- though it was later discovered it had been happening since at least 2010 -- it was learned that Jewish groups had also faced similar scrutiny.

Now, we are learning that at least one group was told it was because of purported worries they were funding terrorism.

Z Street has been vocal about the treatment it received after battling with the IRS for years.  It filed a lawsuit against the government entity in 2010 alleging viewpoint discrimination after applying for 501 (c) (3) status in 2009 (processed through the same office as 501 (c) (4)).

Lori Lowenthal Marcus, president of Z Street, appeared on "On the Record" with Greta Van Susteren Tuesday to explain the situation.

"After we filed our lawsuit, the IRS began having several different positions on why it was taking so long, one of which was because terrorism happens in Israel.  Therefore, they had to look into our organization, because they thought we might be funding terrorism.  We are a purely educational entity.  We didn't fund anybody; we barely funded ourselves!"

When Greta asked whether anyone in her group has been arrested for terrorism, whether their assets have ever been frozen in connection with terrorism, or whether the group has ever even been accused of promoting terrorist activity, the president incredulously replied, "No!"

If that's not enough, the group only filed the suit after their lawyer was told by the IRS that groups connected to Israel receive special scrutiny, and that some are sent to a special unit to determine whether the organization's positions contradict those of the administration's."

"At that point we knew that is classic viewpoint discrimination, and we had to [take] action," she said.

Their group has still not been approved for the 501 (c) (3) status it applied for in 2009.

Watch the entire interview, below:

The POLITICO did some investigating on the matter, writing:

Legal filings show that the problems for Z Street — and apparently for other Israel-related groups — stemmed from an obscure unit in the Cincinnati IRS office: the “Touch and Go Group.” One of the so-called TAG Group’s duties was to weed out applications that might be coming from organizations which might be used to fund terrorism. In response to Z Street’s lawsuit, an IRS manager acknowledged that applications mentioning Israel were getting special attention. “Israel is one of many Middle Eastern countries that have a ‘higher risk of terrorism,’” wrote Jon Waddell, manager of the IRS’s Exempt Organizations Determinations Group. “A referral to TAG is appropriate whenever an application mentions providing resources to organizations in a country with a higher risk of terrorism.”