CAIR-California referred to IRS for tax-exempt status probe by House chairman

FIRST ON FOX: The California chapter of the Council on American-Islamic Relations (CAIR) is facing more intense scrutiny after House Ways and Means Committee Chairman Jason Smith referred the group to the IRS for an investigation into whether the nonprofit should lose its tax-exempt status, citing allegations of misuse of taxpayer funds, possible violations of federal law and support for illegal activities.

“Tax-free status is a privilege, not a right,” Smith, a Republican from Missouri, told Fox News Digital on Tuesday. “Entities that receive special treatment under the tax law must comply with the law and operate in the public interest, and must not finance illegal activities, mislead federal agencies, or misappropriate taxpayers’ hard-earned money.”

Smith on Tuesday sent a letter to Treasury Secretary and acting IRS chief Scott Bessent and IRS CEO Frank Bisignano citing CAIR-California for IRS review, arguing that the nonprofit may no longer meet the legal standards required to operate as a 501(c)(3) organization. The letter alleges evidence alleging that CAIR-California improperly used millions of dollars in federal funds, provided misleading information to the IRS, and materially supported activities that led to arrests and violations of the law, particularly during campus protests across California.

BESSENT ACCUSES WALZ WHILE TREASURY INVESTIGATES WHETHER FRAUD FUNDS IN MINNESOTA REACHED TERRORIST GROUP AL-SHABAB

The Council on American-Islamic Relations is a leading American Muslim civil rights organization with chapters throughout the country and its home base in Washington, DC. Republicans have scrutinized CAIR in recent years; This includes calls for a Treasury investigation into allegations of Hamas ties – allegations the group denies.

CAIR rejected the letter sent to Fox News Digital on Tuesday, calling it “shameful” and based on “a false claim made by a pro-Israel group without fact-checking.”

In March 2025, the New York Post published an article based on an investigation by CAIR-California, an advocacy group called Smart Advocacy Network, that identified allegations of financial impropriety.

CAIR-California has offices in Los Angeles, the San Francisco Bay Area, Sacramento and San Diego.

The call for an investigation comes as the IRS and other investigators investigate what authorities say is a sprawling COVID-era scheme involving money laundering in Minnesota that has dominated headlines since the holiday season. Federal prosecutors estimate the fraud could exceed $1 billion and be as high as $9 billion.

Authorities detained dozens of people, mostly from the state’s Somali community.

“The widespread fraud uncovered in Minnesota has made our efforts to root out fraud in the nonprofit sector more urgent, and we owe it to American taxpayers to hold these bad actors accountable,” Smith told Fox Digital. “If these allegations are true, CAIR-California does not meet the standards necessary to maintain tax-exempt status and the IRS should act accordingly.”

TRUMP CALLED FEDERAL PROSECUTOR NEWSOM THE ‘KING OF FRAUD’ WHEN CALIFORNIA STARTED CORRUPTION INVESTIGATION

The president’s letter detailed concerns about CAIR-CA’s handling of more than $7 million in federal refugee legal aid funding aimed at helping resettle Afghan refugees.

Citing a New York Post article detailing a watchdog group’s previous investigation, the guidance said CAIR-CA helped fewer than 10% of the refugees it promised to help, allegedly diverting millions of dollars through an unregistered affiliate operating under CAIR-CA’s tax identification number, potentially exposing the group to False Claims Act violations.

House Ways and Means Committee Chairman Jason Smith is calling on the Internal Revenue Service to investigate whether a California-based division of the Council on American-Islamic Relations should lose its tax-exempt status. (Leonard Ortiz/Digital First Media/Orange County Record via Getty Images)

“Not only is misdirection of funds to itself potentially a violation of the law, but CAIR-CA’s failure to properly document the use of grant funding would also put the organization at risk of violating the False Claims Act for misrepresenting the use of the grant,” Smith said. he wrote.

CAIR told Fox News Digital that Smith’s letter was a “provably false letter” and was based on “a retracted story about CAIR-California that The New York Post was forced to correct after repeating an unsubstantiated claim made by a pro-Israel group” about “how much he and other members of the Israeli First Congress are committed to smearing and silencing Americans who speak out for the human rights of Palestinians and against the waste of American taxpayer dollars on Israel’s genocide in Gaza.” “It’s a sign that they’ve become desperate,” he said.

“Contrary to Mr. Smith’s unfounded allegations, CAIR-California is a respected civil rights organization with a long history of law-based advocacy and collaboration with government agencies,” the CAIR shot continued.

CAIR continued in an emailed comment: “Every dollar CAIR-California receives is used strictly for its intended purpose and is subject to rigorous internal and external oversight, auditing, and reporting. Funds appropriated to support Afghan refugees are used solely to serve this population, consistent with the terms of the grant. CAIR-California also receives a variety of funds that enable the organization to serve clients beyond the Afghan and Muslim community.”

If the IRS revokes a group’s 501(c)(3) status, this could trigger a cascading blow to the organization; donations may no longer be tax deductible, federal taxes and penalties may apply, and the nonprofit’s funding pipeline may dry up as donors and donors withdraw.

Evidence suggests CAIR-California “institutionally sanctioned and financially supported” college camps during the anti-Israel protests that swept the country from 2021 through the Trump administration, including protests that “resulted in violations of the law and/or arrests,” the letter says.

The letter suggests that the CAIR citizen also endorsed and supported the “Protest Donald Trump” rally held at the Minnesota Republican Party Lincoln-Reagan Dinner during the 2024 election cycle; This may have violated the 501(c)(3) prohibition on directly or indirectly participating in or intervening in any political campaign, the letter alleges.

TRUMP DEMANDED CALIFORNIA TO DELIVERY BUYER LISTS AS $10 BILLION WAS WITHheld DUE TO FRAMEWORK CONCERNS

Smith argued that while protests are generally permitted, the IRS has previously found that groups can lose exempt status if demonstrations escalate into civil disobedience or other illegal activities.

“The only claim in Mr. Smith’s letter that is even remotely close to the truth is CAIR’s claim that he expressed support for college students hosting sit-ins to peacefully protest their university’s financial entanglements with the Israeli government’s genocide in Gaza,” CAIR said. “We were proud to express our solidarity with students who were on the right side of history, peacefully protesting the Gaza genocide, just like the college students who protested segregation, the Vietnam War, and the apartheid regime in South Africa.”

According to information obtained by Fox News Digital, CAIR sent its own letter to Bessent and the IRS on Tuesday morning, following Smith’s letter.

Homeland Security investigators were part of a major fraud investigation in Minneapolis on Monday after a video was released over the weekend of alleged day care fraud. (Department of Homeland Security)

Conservatives have previously argued that CAIR’s national network has shifted from civil rights advocacy to partisan politics and activism; This pointed to past allegations of improper political interference by GOP lawmakers and longstanding concerns about Hamas-affiliated organizations, which CAIR has repeatedly denied.

Texas Governor Greg Abbott, for example, designated CAIR and the Muslim Brotherhood as foreign terrorist organizations under state law in 2025, claiming the groups “support terrorism around the world and subvert our laws through violence, intimidation and harassment.”

CAIR withdrew Abbott’s appointment and said: Houston Chronicle in January He has reportedly worked to stop terrorism in the United States, including by allegedly flagging the FBI as a potential threat to President Donald Trump during his first term, the source reported.

“We are only announcing this in response to these ridiculous claims that CAIR, which literally helps stop acts of terrorism, is a terrorist organization,” Edward Ahmed Mitchell, deputy national director of CAIR, told the Chronicle. “CAIR not only verbally condemned terrorism, we took action to stop it.”

Smith’s guidance addressed long-standing concerns about CAIR’s alleged links to terrorism; these include reported links to the now-defunct Holy Land Foundation, which was convicted in 2009 for providing material support to Hamas.

CLICK TO DOWNLOAD FOX NEWS APPLICATION

“Given CAIR-CA’s concerning activities and the fact that the CAIR network has suspected ties to terrorist organizations such as Hamas, I ask you to use your authority to investigate CAIR-CA and, after adequate review, consider revoking CAIR-CA’s tax-exempt status,” Smith concluded in his letter.