WASHINGTON, D.C. – Ways and Means Committee Chairman Jason Smith (MO-08), joined by every Republican member of the Committee, is calling on the Internal Revenue Service (IRS) to overhaul its oversight of the non-profit sector as the ongoing Somali fraud scandal in Minnesota, and the theft of potentially billions of taxpayer dollars, has underlined the need for serious reform following the Biden Administration’s failure to hold these organizations accountable.
The letter to Acting IRS Commissioner Scott Bessent and IRS CEO Frank Bisignano comes amid an ongoing Ways and Means Committee investigation into waste, fraud, abuse, and other illegal activity within the United States’ tax-exempt sector writ large that has resulted in the referral of 11 non-profit organizations to the IRS for revocation of tax-exempt status.
Chairman Smith and Ways and Means Republicans wrote, “While the Feeding Our Future case points to the need for oversight and accountability surrounding tax-exempt organizations funneling taxpayer dollars to non-exempt or even illegal purposes, it also demonstrates the urgency for the IRS to implement a new approach for the non-profit sector when it comes to updating its systems and communication with state agencies as well… it is imperative that the IRS transition from the laissez-faire approach implemented under the Biden Administration and utilize a more hands-on approach when overseeing and safeguarding taxpayer dollars.”
The widespread theft of taxpayer dollars exemplified by the Feeding Our Future scandal in Minnesota, which has resulted in the prosecution of nearly 80 individuals by the Department of Justice (DOJ), is even more disturbing, Smith argues, given the IRS revoked Feeding Our Future’s tax-exempt status in February of 2020, yet the organization continued to advertise and potentially reap the benefits of tax-exempt status for months because the IRS failed to update its systems.
The letter continues, “Minnesota audit findings suggest that despite the IRS revoking Feeding Our Future’s tax-exempt status in February of 2020 after the organization failed to meet IRS reporting requirements for three consecutive years, Feeding Our Future continued to advertise itself as a tax-exempt organization and even received approval as a Summer Food Service Program sponsor by Minnesota’s Department of Education in June of 2020, possibly due to a delay by the IRS in updating its systems to reflect that Feeding Our Future was no longer tax-exempt.”
The letter also underscores how disturbing allegations of a terror-financing scheme in Minnesota are evidence of a potentially more widespread problem in the tax-exempt sector. In October, Chairman Smith called on the IRS to revoke the tax-exempt status of multiple non-profit organizations with ties to designated terrorist organizations.
The letter continues, “Reports also suggest that some of this money may have ended up in the hands of the notorious Al-Shabaab terrorist group, with one confidential source saying that ‘[t]he largest funder of Al-Shabaab is the Minnesota taxpayer’…Regrettably, this is not the first time the U.S. House of Representatives Committee on Ways and Means has had to express concern over tax-exempt organizations manipulating the Tax Code to promote anti-American and/or pro-terrorist ideals that do not further any tax-exempt purpose. For example, not only did the Committee write to the IRS requesting revocation of tax-exempt status for multiple non-profit organizations with ties to designated terrorist groups in October of this year, but the Committee is also actively investigating American non-profits operating as extensions of the Chinese Communist Party. These letters came after several requests to the Biden Administration to take action, all of which failed to come to fruition.”
You can read the full text of the letter here.