Smith Calls for IRS Investigation Into Tax-Exempt CAIR-California Over Alleged Misuse of Taxpayer Funds and Illegal Activity

WASHINGTON, D.C. - Ways and Means Committee Chairman Jason Smith (MO-08) has referred the Council on American-Islamic Relations-California (CAIR-CA) to the Internal Revenue Service (IRS) for investigation and potential revocation of its tax-exempt status, citing serious concerns about misuse of taxpayer dollars, possible violations of federal law, and activity incompatible with its tax-exempt status.

The referral outlines evidence that CAIR-CA may have improperly used millions in federal funds, provided misleading information to the IRS, and materially supported unlawful conduct, including endorsing and assisting disruptive and illegal campus encampments that led to hundreds of arrests across California. The letter also raises alarms about CAIR-CA's reported involvement in overtly political activity and protests that devolved into chaos, violence and law breaking, conduct that may violate longstanding restrictions on tax-exempt organizations.

The chairman's referral also raises broader concerns surrounding CAIR's national network, including concerning reports the network violated the prohibition on 501(c)(3)s directly or indirectly participating, or intervening in, any political campaign when it endorsed and sponsored a "Protest Donald Trump" rally at the Minnesota Republican Party Lincoln-Reagan Dinner. This allegation is even more alarming given fraud recently uncovered by the Trump Administration in Minnesota and raises the question of whether CAIR-MN was aware of how much fraud was occurring and intentionally subverting efforts to bring additional scrutiny of the vast fraud network now uncovered. Not to mention CAIR's purported connections to terrorism, which is also outlined in the letter, including potential support for Hamas and links to the Holy Land Foundation, a now-shut-down tax-exempt organization under investigation for supporting Hamas.

Chairman Smith wrote, "In the case of CAIR-CA, evidence suggests that the tax-exempt organization institutionally endorsed and materially supported several encampments on college campuses across California, some of which resulted in violations of the law and/or arrests. For example, one of CAIR's executive directors openly urged agitators to defy campus rules during an unauthorized encampment on the University of California-Los Angeles's campus that resulted in the arrests of more than 200 individuals, while CAIR-CA's San Diego branch went so far as to celebrate its institutional support 'before, after, and during' the University of California-San Diego encampment that resulted in 64 arrests. Supporting these types of unauthorized encampments and condoning harmful and illegal behavior on college campuses is not only alarming, but also raises serious questions given CAIR's larger organizational involvement that same year in anti-Israel protests in Washington, D.C., that quickly descended into chaos - including the burning of the American flag - and resulted in hundreds of arrests."

Smith also highlights troubling reports regarding CAIR-CA's handling of more than $7 million in federal refugee legal-aid funding to resettle Afghan refugees. According to public records, CAIR-CA assisted fewer than 10 percent of the refugees promised, while allegedly routing millions of dollars through an unregistered affiliate operating under CAIR-CA's own tax identification number, resulting in potential False Claims Act and disclosure violations.

The letter continues, "In addition to providing support for acts of civil disobedience, any potential violation of the False Claims Act or willful failure to supply accurate information to the IRS should put a tax-exempt organization's tax-exempt status in question. And in this case, CAIR-CA's reporting to the IRS draws serious concern. For example, reporting suggests that CAIR-CA received more than $7 million in Federal refugee legal-aid funding to help re-settle Afghan immigrants, but assisted less than 10 percent of the proposed Afghan refugees and instead sub-granted half of the money to CAIR-Los Angeles-an unregistered entity operating under CAIR-CA's Employer Identification Number ("EIN"). Given that public records show CAIR-Los Angeles was not registered as a separate legal or tax entity at the time, coupled with the fact that CAIR-Los Angeles was operating under the EIN of CAIR-CA, this sub-grant appears to be a façade to merely obscure the trace of taxpayer funds and redirect the funding back to CAIR-CA."

You can read the full text of the letter here.