The California chapter of the Council on American-Islamic Relations is under increased scrutiny after a top congressional leader referred the nonprofit to the Internal Revenue Service for investigation. The referral alleges misuse of federal funds, misleading information provided to authorities, and support for unlawful activity, particularly during recent campus protests. The group is accused of improperly handling millions in refugee aid and potentially violating federal law, with calls for its tax-exempt status to be revoked if the allegations are substantiated.

The organization has strongly denied the claims, describing them as politically motivated and based on inaccurate reporting. CAIR-California maintains that its financial practices are transparent and that it operates within the law, emphasizing its commitment to civil rights advocacy and lawful protest. The investigation comes amid broader efforts to crack down on nonprofit fraud, following a major COVID-era scheme in Minnesota. If the Internal Revenue Service revokes the group's tax-exempt status, it could have significant financial repercussions for the organization.