Petition Challenges Israeli Tax Authority's Selective Enforcement on Haredi Educational Tax Benefits

The organization "Emet LeYaakov BeYisrael" and CPA Teitelbaum, representing hundreds of Haredi nonprofits, educational institutions, and welfare organizations, filed an urgent petition to Israel's Supreme Court sitting as the High Court of Justice on Monday. The petition demands the cancellation of what it calls an administrative freeze on tax benefit approvals under Section 46 of the Income Tax Ordinance for Torah study institutions. It also seeks to halt what the petitioners describe as selective and discriminatory enforcement targeting only the Haredi community.

The petition directly criticizes the Israeli Tax Authority and the State Attorney's Office for conditioning tax benefit approvals on verifying the military status of students in these institutions. The petitioners argue this new administrative mechanism lacks explicit legal basis and effectively forces educational institutions to act as enforcement arms of the military authorities. They claim that while Torah institutions face frozen applications or demands for detailed personal and military status information, secular institutions continue receiving tax benefits without such requirements.

Central to the petition is a request to delay the Finance Committee's approval of dozens of civilian institutions seeking Section 46 recognition, including the Friends of Sapir Academic College and the Hof HaCarmel Sports Association. These civilian bodies have not been asked to provide student lists or military status declarations. The petitioners call for a uniform, equal policy applying to all institutions regardless of religious or academic nature.

The petition describes the new policy as a severe economic sanction that undermines institutions' fundraising abilities by denying donors tax deductions, leading to significant revenue losses. CPA Teitelbaum presented data showing that even the threat of freezing benefits causes serious cash flow problems, jeopardizing ongoing operations, salary payments, and aid distribution to needy families.

Legally, the petition relies on the principle of equality and a prior Supreme Court ruling (HCJ 5819/24) mandating uniform enforcement of military service-related economic policies. It highlights that thousands of Israeli citizens, including approximately 400,000 students in higher education, do not serve in the military for various reasons, yet their institutions are not subjected to similar scrutiny. The petition also raises privacy concerns, arguing that the Tax Authority's demand for sensitive personal and medical data from Torah institutions is an unprecedented supervisory burden not imposed on any other public body.

"We launched this legal battle to stop a glaring administrative injustice," said Emet LeYaakov and its legal team. "The Tax Authority and State Attorney have singled out one sector as suspect, turning educational institutions into military enforcement arms without legal authority. Law and economic enforcement must be applied uniformly. If the state links military service to Section 46 benefits, it must apply equally to universities, colleges, and sports organizations. We demand an immediate halt to selective approvals in the Finance Committee and the establishment of neutral, equal standards for all."