President Trump lacks the legal power to independently revoke Harvard University’s tax-exempt status. But does that really stop him?
As he works to financially undermine the university, Trump is embroiled in a conflict with Harvard, instigating lawsuits while probing into areas like research funding and international student admissions, along with the contentious issue of tax exemptions.
The IRS is supposed to function as a neutral agency, and Harvard argues that the administration’s actions are without legal foundation.
Experts contend that stripping Harvard of its tax-exempt status is nearly impossible, and some of Trump’s statements may already border on illegal.
“My worries are not that significant since the administration is unlikely to prevail unless they possess some insider information about Harvard,” a legal expert noted.
“Harvard aims to keep its tax exemptions, but as long as Trump continues to use the IRS as a weapon against his perceived adversaries, it’s detrimental to both the IRS and to democracy,” Branson remarked.
For more than a month, Trump has been advocating for the cancellation of Harvard’s tax-exempt status, intensifying his feud with Ivy League institutions. In April, it was reported that his Treasury Department had urged the IRS to implement changes.
On Friday, he escalated his rhetoric.
“We’re going to take away Harvard’s tax-free status, and it deserves it!” he posted about the true society.
Trump has also called on the nation’s oldest universities to abandon diversity and inclusion initiatives and revise their enrollment and employment policies. When they refused, he cut off over $2 billion in federal aid.
In retaliation, Harvard has filed a lawsuit against the administration and criticized Trump’s initiative regarding taxes.
“The government has historically exempted universities to support their educational missions. Tax exemptions enable funding for scholarships, healthcare improvements, and technological innovations that boost economic growth,” the university stated.
On Monday evening, the Trump administration declared that Harvard University would no longer qualify for new federal grants.
Legal experts caution that Trump’s efforts to revoke tax-exempt status could violate the law in two primary ways. First, the IRS is not permitted to be pressured to conduct an investigation. Congress has made it illegal for anyone in the executive branch to “request, directly or indirectly, to initiate or stop an audit or investigation concerning a specific taxpayer’s obligations.”
“Even suggesting such things could break federal law,” remarked Raymond Brescia, a law professor at Albany Law School.
“Unless there’s a clear prohibition on making such threats, it would be very challenging to strip a nonprofit of its status, and there’s also a procedural pathway involved,” Brescia added.
The second issue arises if Trump creates a scenario amid an aggressive IRS investigation. It’s also illegal for anyone in the executive branch to disclose whether a particular organization or individual is under IRS scrutiny.
“We have no idea if Harvard is being audited right now, and we can’t know. That’s not something the IRS can reveal,” stated Philip Hackney, a professor at the University of Pittsburgh School of Law.
Furthermore, the IRS cannot swiftly strip an organization of its tax-exempt status, even if that were desired.
Typically, the IRS would take time to review and address any findings from Harvard to ensure compliance with their 501(c)(3) status. If the IRS attempted to revoke that status, the university could contest the decision in court.
Even if Trump could potentially request an IRS inquiry, Harvard wouldn’t be able to take action on the matter until such an investigation occurs.
“There’s specific legislation stating that taxpayers and organizations cannot sue over tax matters unless the IRS acts. So it’s only if Harvard’s exemption gets revoked that they could pursue legal action,” an expert explained.
The IRS has already been in the midst of significant political discussions during Trump’s early presidency, dealing with the departure of four acting committee members.
Following a 40% reduction in workforce under the Biden administration, agencies have sought to improve efficiency, gaining access to taxpayer data despite resistance from Democrats.
Historically, the only institution to lose tax-exempt status was Bob Jones University in the 1980s, due to its discriminatory policies against students in interracial marriages.
Losing tax-exempt status would be a major financial blow for Harvard, affecting donations and requiring the university to pay various federal, state, and local taxes.
“The main argument is that Harvard serves an essential purpose for our country, and, universally, we acknowledge that education is significant. Thus, all private schools benefit from similar tax-exempt provisions,” Hackney commented.
Revocation of that status could lead to severe challenges for Harvard operations. “It would be very damaging. If it happened without due process, it would be both unfair and destructive, impacting Harvard and its entire community,” he concluded.
