Court Battle Developing Over Alleged Political Campaign Activity

Abstract

A court battle is brewing between two New York organizations, which may lead to a judicial determination as to whether certain undertakings by one of these entities, a charitable (IRC § 501(c)(3)) organization, constitute prohibited political campaign activity and whether it filed false annual information returns with the IRS. The parties to this lawsuit are the Zionist Advocacy Center and the New Israel Fund. The ZAC is alleging that the NIF has directly engaged in political campaign activity, makes grants to organizations that engage in electioneering, falsely reports to the IRS that it does not conduct political campaign activity, and has violated the New York False Claims Act by submitting fraudulent federal returns to the New York government in support of its state tax exemption. On February 16, the US District Court for the Southern District of New York denied NIF's motion to dismiss the case (State of New York ex rel. TZAC, Inc. v. New Israel Fund).