J Street's Wrong Turn

First, J Street goes after Regavim's tax-exemption status.

While the US has consistently opposed illegal settlement expansion, it has allowed Americans to make tax-deductible contributions to groups actively engaged in dispossessing Palestinians of their land and aiding the spread of settlements. Today, we're calling on the Treasury Department to review whether tax-deductible treatment for donations to such groups meet the relevant requirements -- and, if not, to cut off the flow of tax-deductible US dollars...To: Treasury Secretary Jack Lew -  Internal Revenue Service (IRS) requirements are clear about the criteria organizations must meet to benefit from tax-deductible, charitable donations: Their activities must not be “illegal [or] contrary to a clearly defined and established public policy.”

This follows a campaign (see here) which asserts

Support for settlements...contradicts the clearly established, bipartisan US policy of opposition to settlement expansion. Why should US taxpayers subsidize activities expressly designed to oppose and undermine decades of consistent US policy, which are illegal under international conventions signed and ratified by the United States? This is a question we’re asking of the Treasury in an action we launched last week. 

Then, MK Michal Rozin lends support.

As a Member of Knesset, my job is to speak out on behalf of the best interests of my fellow citizens and my country...the settler movement and its powerful allies in the Netanyahu government have been quietly laying the groundwork for annexation in the West Bank’s Area C...This process is led in part by influential right-wing NGOs (like the group Regavim),...Incredibly, Regavim and their fellow settler groups often benefit from tax-free contributions coming from the USA -- even while they actively oppose the two-state solution, undermining key US and Israeli interests.
That’s why J Street has called on the US Treasury Department to review whether the activities of Regavim should make them ineligible to receive tax-free contributions...I’m so grateful to J Street supporters like you, and to all those Jews around the world who love Israel and know that supporting Israelis means standing up for diplomacy and peace -- and speaking out when our government’s policies put our values and security at risk.
Thank you for all that you do,
MK Michal Rozin

But it's based on a lie.

First of all, that "public policy" claim is wrong. it's an administration policy, not public.

Whereas way back in 1978, a legal opinion was expressed by the State Department's legal advisor that activity related to the promoting and facilitating of Jewish civilian residency in the disputed areas of the former Palestine Mandate territories not currently under Israel sovereignty (and let's not forget that all of Jerusalem is still considered as I write by the State Department not to be Israel territory) is

inconsistent with international law.

the arguments are weak and misrepresent international law.  Even a Peace Now resource reveals, as does this one, that most of the US Presidents' words they use avoid the legal aspect as has President Obama as he refers to the communities as "illegitimate'.  Then Secretary of State Madeleine Albright actually admitted the Jewish communities across the Green Line are legal as have many other American political figures and scholars.

This campaign seems to be based on this Nicholas Mirkay article from 2013 and on this one by Amanda Berman in 2010 Already in 2011, Mirkay went after the JNF to the delight of some. And seems he started at this as early as 2008 based on his 2007 paper. (And the NYTimes has pumped it like here in 2010 and see this letter by William H. Welsch Sep 22, 2006). But already, as noted there, it was pointed out that Mirkay and comrades are mixing apples and pears:

“I do not think racial [discrimination] in America, with our own unique history, is the same as the unique situation of Israel and the Palestinians,” Ellen Aprill, a professor at Loyola Law School

Indeed, as my second point, the challenge to a presumed tax-exemption status must prove a negation of or actions of that organization is does it go againts "fundamental public policy" and "well-defined standards of public policy" as stated clearly here.  It must be shown to be "contrary to well-established and clearly defined public policy." 

As further clarified in IV Scott on Trusts Section 377 (3d ed. 1967):

"A trust cannot be created for a purpose which is illegal. The purpose is illegal ... if the trust tends to induce the commission of crime or if the accomplishment of the purpose is otherwise against public policy.... Where a policy is articulated in a statute making certain conduct a criminal offense, then ..., a trust is illegal if its performance involves such criminal conduct, or if it tends to encourage such conduct." . 
....In determining whether activities of this type are consistent with IRC 501(c)(3), the Service relies on a three-part test. Rev. Rul. 80-278. Such activities will be considered permissible under IRC 501(c)(3) if: (1) The purpose of the organization is charitable; (2) the activities are not illegal, contrary to a clearly defined and established public policy, or in conflict with express statutory restrictions; 

One more opinion on this:

The Treasury Department is empowered to enforce "established public policy" with respect to tax-exempt charities.' Under this public policy power, the Treasury has revoked the tax-exempt charitable status of organizations that discriminated against blacks, organizations whose members engaged in civil disobedience against war, and organizations involved in illegal activity. The Treasury interprets its public policy power as applying to any activity that violates clear public policy...The point at which a public policy is sufficiently established for purposes of applying the Treasury's public policy power is unclear...Presently, neither Congress or the United States Supreme Court has decided conclusively whether race-based affirmative action violates public policy.

Besides the obvious, that Jewish resettlement activity in Judea and Samaria is not to be compared to the rest of the examples - which are mainly race-oriented or proven criminal activity but also internal American issues and to extend the IRS power to actions of non-Americans, even if supported by American citizens - it is clear that no illegality is involved.

But more important, American public policy was quite the opposite.  It supported Jewish resettlement activity through the Anglo-American Convention of 1924 when the territory defined as the Jewish national and historic homeland was all the region between the sea and the river.  If it was legal then, it's legal now and as there is no equal sovereign power to Israel who can prove claims to that territory, all this legalese fumfitting (to mutter, splutter and stutter in Yiddish) is just pro-Palestine propaganda (PPP).

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