The story as updated by Z Street on November 22:
"Z STREET, an organization devoted to pro-Israel public education, today filed in federal court its Opposition to the government’s effort to continue violating the US Constitution by discriminating against the organization because its views on Israel and the Middle East differ from those of this government. On August 25, 2010 Z STREET filed a Complaint in federal court charging the Internal Revenue Service with constitutional violations by subjecting Z STREET’s application for tax exemption to a discriminatory process.In its response to Z STREET’s Complaint, the government did not deny that it engaged in this First Amendment violation. Instead, the government’s position is that (1) it can violate the Constitution whenever it wants and the only way to stop it is if the government agrees to be stopped, and (2) Z STREET should go to a different court to get something it should already have - tax exempt status - were it not for the constitutional violation the government has inflicted upon it." -moreAnd as reported by the Arab News on November 26:
Jewish group suing IRS over its tax-exempt statusAnd here's a link to Z Street.
". . . Z Street accused the IRS of “targeting pro-Israel groups” in federal court saying that it received a letter from an IRS agent that their tax experts said was likely outside the usual or appropriate scope of an IRS inquiry.“Does your organization support the existence of the land of Israel?” IRS agent Tracy Dornette wrote the organization, according to this week's court filing, as part of its consideration of the organizations application for tax exempt status.“Describe your organization's religious belief system toward the land of Israel.”The complaint also alleges that IRS agent Diane Gentry said applications from organizations dealing with Israel-related issues “are being sent to a special unit in the D.C. office to determine whether the organization’s activities contradict the administration’s public policies." -more