CAIR Appealing to IRS After Tax-Exempt Status Revoked

Shown here is Council on American-Islamic Relations executive director Nihad Awad. (Reuters)

The largest Muslim advocacy group in the country plans to appeal to the IRS to regain its tax-exempt status after that status was revoked over an apparent problem with its paperwork.

The Council on American-Islamic Relations, as well as the offshoot CAIR Foundation, was included earlier this month on a massive list of 275,000 organizations that the IRS said were losing their tax-exempt status because they did not file required annual reports.

Most of the groups on that list are presumed to be defunct, but CAIR is not -- its website continues to solicit "tax-deductible" donations.

CAIR and the thousands of other groups were cited after the IRS claimed they failed to file annual reports for three consecutive years as required by law. All those on the list can petition the IRS to have their status reinstated by filing an application for exemption and paying a fee.

CAIR spokesman Ibrahim Hooper told FoxNews.com that the organization's accountant says CAIR "filed promptly in the last several years." But he said the status problem stems from "questions" over filings dating back to 2006 or 2007.

"We'll be doing whatever's necessary ... to rectify the situation," Hooper said.

Hooper downplayed CAIR's inclusion in the IRS chart.

"This is a technical paperwork issue that we're dealing with with the IRS -- as 275,000 other groups, including the AARP and major universities," Hooper said, before suggesting that reporting on its lost status was part of an effort to spread anti-Muslim "hate."

Losing tax-exempt status would be a major blow for any of the groups on the list still in business. Losing the exemption means organizations would have to pay income tax and their donors would not be able to deduct their contributions.

The required annual reports typically include information about a group's donations and other sources of revenue, as well as expenses, activities, investments and compensation of employees. Revenue information would include a breakdown of how much money is coming from various sources like membership dues and fundraising events, but not necessarily information on specific donors.

The IRS did not comment on why CAIR was included on the list.

Earlier this month, the IRS said in a statement that the agency tried for several years to inform organizations about the requirement to file this annual information.

"During the past several years, the IRS has gone the extra mile to help make tax-exempt groups aware of their legal filing requirement and allow them additional time to file," Commissioner Doug Shulman said.

CAIR is arguably the most vocal Muslim advocacy organization in the country, regularly condemning instances of bias, harassment and "hate crimes" against Muslims in the U.S.

But the group has also come under criticism for, among other reasons, being named by the Justice Department as an unindicted co-conspirator in a major terror financing case involving the Holy Land Foundation.

According to the Investigative Project on Terrorism, which first reported the IRS designation change, CAIR's state chapters still have active non-profit designations.

The IRS said in its statement that prior donations to any of the groups on the list remain tax-deductible.