By Charles Switzer
2:27am PDT, Apr 18, 2025
IRS Considers Rescinding Harvard's Tax-Exempt Status
The
Donald Trump administration is considering an extraordinary move to rescind the tax-exempt status of Harvard University, sources familiar with the matter revealed.
This decision comes after the Department of Government Efficiency
(DOGE) visited the university's headquarters,
CNN reported.
A final decision on whether to revoke the university's tax-exempt status is expected soon. The administration has already withheld more than $2 billion in funding from Harvard, which has resisted the White House's policy demands, arguing that private universities should have the right to determine their own teaching practices.
Here's what's happening.
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Trump Criticizes Harvard and Threatens Action
President Donald Trump recently raised the possibility of targeting Harvard University for its
noncompliance with the administration's policies.
"Perhaps Harvard should lose its Tax Exempt Status and be Taxed as a Political Entity if it keeps pushing political, ideological, and terrorist inspired/supporting 'Sickness?' Remember, Tax Exempt Status is totally contingent on acting in the PUBLIC INTEREST!" he wrote on Truth Social.
His remarks seemingly echo ongoing tensions between the university and the administration, particularly around the portrayal of a campaign against antisemitism.
Administration and IRS Review of Harvard's Status
The IRS, a bureau under
the Treasury Department, has the authority to revoke tax-exempt statuses under federal law.
Gary Shapley, whom Donald Trump appointed as acting IRS commissioner this week, holds the power to rescind the university's tax-exempt status if the IRS determines that Harvard violated the rules governing non-profit organizations.
Typically, the revocation of such a status is rare and follows a detailed review of potential violations, including political activity which non-profits are prohibited from engaging in.
Historical Context of Tax-Exempt Status Revocation
Historically, the IRS has revoked tax exemptions in rare instances, such as in the
Ronald Reagan 1980s when a Christian college lost its status for having a racially discriminatory admissions policy.
R. William Snyder, a professor at George Mason University, commented, "To my knowledge, this is the first time an administration has tried something like this," adding that revoking a university's tax-exempt status for reasons of disagreement with its educational practices was unprecedented.
Implications of Harvard Revocation and What's Next
Nina Olson, who served as the independent national taxpayer advocate within the IRS from 2001 to 2019, explained that the revocation process typically begins with a full audit.
"The entity would first receive a notice from the IRS, informing them about the audit and requesting documents for the agency to review," Olson said.
This process can take months and involves multiple stages of dialogue and document submission. If the IRS moves forward with revocation, nonprofit organizations have the right to challenge the decision in court, potentially all the way to the Supreme Court.
As for whether the IRS is looking into other universities' tax-exempt statuses, it remains unclear. However, the 2.0 Donald Trump administration has previously threatened to cut funding to various colleges unless they change their policies.
