In a bold move, the Trump administration has requested the Internal Revenue Service (IRS) to revoke Harvard University’s tax-exempt status. This decision comes amidst ongoing tensions between President Donald Trump and the prestigious institution, primarily over allegations regarding its handling of antisemitism and its diversity practices. Sources familiar with the situation revealed that this directive marks a significant escalation in the president's feud with Ivy League schools and other nonprofit organizations that his administration labels as “woke.”
Tax-exempt status is generally granted to organizations deemed charitable, religious, educational, or engaged in social welfare. However, these organizations must comply with tax laws that prevent them from participating in specific political activities. Experts have noted that there is currently no evidence suggesting that Harvard has breached any of these regulations.
Critics are voicing concerns over the politicization of the IRS. Steve Rosenthal, a former senior fellow at the Tax Policy Center, emphasized that the IRS should enforce tax regulations without bias and not used as a tool for political retribution. The Treasury Department has not yet commented on the situation, while CNN was the first to report on the request made to the IRS.
The authority to investigate and modify tax-exempt statuses lies solely with the IRS, and it is illegal for the president to directly or indirectly instruct the agency to act against taxpayers. Andrew De Mello, the acting chief counsel of the IRS, received this controversial request from Treasury Department officials and has not yet decided on its implementation.
Natasha Sarin, a Treasury official under the Biden administration, expressed that any attempt to politicize the tax code is not only dangerous but also illegal. She highlighted the safeguards in place to prevent the executive branch from weaponizing the tax system for political objectives.
Trump allies have suggested that Harvard may soon be joined by numerous other colleges and universities in facing scrutiny over their tax-exempt status. Newt Gingrich, the former House GOP leader, indicated that the administration may target a wide range of educational institutions that he believes do not align with American values.
Earlier this month, the Trump administration demanded extensive control over Harvard's operations, citing issues with its diversity, equity, and inclusion policies, particularly in relation to hiring, admissions, and student activism concerning Israel’s conflict with Hamas. Harvard formally rejected these demands, marking a significant moment where a university openly challenged the administration's push for sweeping reforms in higher education.
The administration quickly responded by announcing a freeze on more than $2 billion in federal funding to Harvard. Trump further escalated the situation with a post on Truth Social, suggesting that the university should lose its tax-exempt status and making unfounded claims about its support for terrorism.
Since taking office, the Trump administration has made significant changes within the IRS, promoting political allies and demoting career officials. De Mello assumed the role of chief counsel after the Treasury Department removed a career IRS attorney who reportedly hindered the administration's attempts to utilize confidential tax data for immigration purposes. New appointments, including Gary Shapley as acting commissioner, signify a shift in the agency's focus, with discussions about reviewing and potentially revoking the tax-free status of organizations suggested by Republican allies.
In light of these developments, Rep. Jason T. Smith (R-Missouri) has urged the IRS to eliminate tax-exempt status for groups opposing Israel’s actions in Gaza and for a Georgia political organization aligned with Democratic values. The IRS has previously faced scrutiny regarding political bias in its processes, particularly after revelations that both conservative and liberal groups were disproportionately affected by the agency's scrutiny.
The unfolding situation surrounding Harvard University and its tax-exempt status reflects broader tensions about political influence in higher education and the role of the IRS in maintaining impartiality in tax administration.
