A Legal Activist Wants to Use the IRS to Punish an Israeli-Palestinian Peace Group

A frivolous lawsuit against the New Israel Fund threatens any nonprofit engaged in civil rights work.

The IRS building in D.C.
Chip Somodevilla/Getty Images

David Abrams is a guy who likes to sue. Chiefly he likes to sue entities that he views as aiding terrorists and terrorism, often based on stuff he finds online. In 2015, for instance, he sued the humanitarian organization founded by former President Jimmy Carter, under the False Claims Act, claiming the NGO had defrauded the U.S. government by supporting terrorists because it held events encouraging dialogue with Palestinian political parties and factions. Because at these meetings the Carter Center had provided “physical assets of fruit, cookies, bottled water, and presumably other food and drink,” it had, according to the suit, given “material aid to terrorists.” In 2018, a district court granted a Department of Justice motion to dismiss the lawsuit, finding that serving cookies and water at peace dialogues with Palestinians was not in fact an act of aiding terrorists but, rather, an indicator that Abrams just had “a difference of opinion with the Carter Center about how to resolve conflict in the Middle East.”

Abrams is surely free to continue suing entities over the cookies they choose to serve. But, the ACLU warned in a motion Friday, one of his latest lawsuits threatens any nonprofit engaged in any civil rights advocacy on any politically charged issue.

Abrams’ target this time is the New Israel Fund, an organization dedicated to advancing democracy, equality, and basic freedoms in Israel. It raises millions of dollars that it distributes through grants to private Israeli organizations engaged in promoting human and civil rights, social and economic justice, religious pluralism, and other democratic causes. Abrams’ complaint openly states that, as was the case in the Carter Center litigation, his principle objection to NIF’s work is that he disagrees with its mission. As his complaint contends, “although the stated purpose of NIF is to help strengthen Israel’s democracy,” NIF opposes what he views as “Israeli security” by supporting organizations that “seek to undermine Israel.”

Abrams sued the group in 2019 under the New York False Claims Act, alleging that the New Israel Fund has violated its tax-exempt 501(c)(3) status because some grantees engage in “electioneering.” The U.S. tax code does prohibit 501(c)(3) organizations from engaging in some forms of political activism, but grants the IRS authority to police those activities. Abrams brought his suit as a so-called qui tam action, in which a private party may bring an action on the government’s behalf. Abrams’ complaint accuses NIF of fraud and demands over a hundred million dollars in treble damages plus civil penalties.

The lawsuit is a longshot, but Abrams does not need to succeed in court to declare victory. As Lara Friedman has detailed at length here, Abrams has used the ambiguous language of “material support” regulations to “intimidate and coerce NGOs into abandoning moral, humanitarian, political and financial support for Palestinians.” Indeed, while he readily concedes that free speech protects “the right of everyone to criticize Israel,” he appears to be awfully fond of serial litigation designed to chill NGOs involved in any activity he deems anti-Israel. As such, he’s sued Norwegian People’s Aid; Doctors Without Borders (for operating hospitals in the Gaza Strip); Airbnb; the National Lawyers Guild (for refusing to publish an ad in a dinner journal); and the American Studies Association for “unlawfully denying” a group permission to join (the ASA says it never asked to join). Abrams likens this last lawsuit to Brown v. Board of Education. Some of these suits (like Norwegian People’s Aid) end in settlements. Litigation is costly and burdensome.

The NIF lawsuit shows Abrams is trying a new and dangerous tactic. Last Friday, the American Civil Liberties Union joined the New Israel Fund’s legal defense team in moving to dismiss Abrams’ lawsuit. They argue that the New York False Claims Act bars qui tam actions when all of the allegations in the complaint are “substantially the same [as] allegations or transactions” that have been “publicly disclosed,” and everything alleged here was already publicly disclosed in tax filings and the news media. The ACLU also argues that private litigants can’t enforce federal tax laws under cover of state fraud statutes. As the motion to dismiss notes, “This lawsuit is thus the wrong type of action, brought by the wrong party, in the wrong court.” Finally, the motion sensibly points out that the nexus between NIF itself and the conduct of a handful of grantees in no way means that NIF is “electioneering”—and the complaint never does more to prove otherwise. It’s true that some of NIF’s grantees took actions to enforce civil rights guaranteed under Israel’s Basic Law in the larger context of the Knesset elections. But under Abrams’ novel view of the code, one could retroactively penalize legal actions and issue advocacy done by any group that was granted funds, simply because that civil rights work occurred in the context of an election.

The truly frightening aspect of the lawsuit, and the reason the ACLU has intervened to stop it, is that it is trying to leverage the federal tax code into suppressing activity that represents core political and expressive activity. As the motion to dismiss puts it, if Abrams has his way, “the New York False Claims Act would impose draconian damages and penalties against registered charities engaged in protected, and arguably tax-preferred, expression.” And this is precisely why Congress chose to give the IRS, and not private litigants, exclusive authority to enforce Section 501(c)(3). The motion to dismiss concludes that if private parties “with axes to grind could subject non-profits whose missions they dislike to the risk of massive retroactive liability based on novel interpretations of federal tax law, protected expression would be chilled and the administration and enforcement of tax law would be destabilized.”

Brian Hauss, one of the ACLU attorneys on the case, told me via email that this potential fallout is the reason the case is so important to the ACLU. “Abrams’ far-fetched interpretation of the Internal Revenue Code would bankrupt non-profits for their work defending the ground rules of democracy,” he wrote. “Promoting freedom, equality, and the rule of law is not partisan political activity under the tax code.”

Abrams is free to object to the political views of anyone he believes to be a terrorist. He is free to criticize political work that he believes undermines Israel. He is also free to file one frivolous lawsuit after another. Sure, endless, meritless litigation seems to be a way of life for those who cannot make their arguments effectively in other public fora. But the courts need not endorse the weaponization of the U.S. tax code to discourage speech and activism.