IRS making plans to rescind Harvard’s tax-exempt status

By Evan Perez and Alayna Treene, CNN

(CNN) — The Internal Revenue Service is making plans to rescind the tax-exempt status of Harvard University, according to two sources familiar with the matter, which would be an extraordinary step of retaliation as the Trump administration seeks to turn up pressure on the university that has defied its demands to change its hiring and other practices.

A final decision on rescinding the university’s tax exemption is expected soon, the sources said.

The administration already has blocked more than $2 billion in funding from the nation’s oldest university, which is fighting the White House’s policy demands, citing the constitutional right of private universities to determine their own teaching practices.

President Donald Trump in recent days raised the idea of punishing the Ivy League university for not complying with what the administration has sought to portray as a campaign to fight antisemitism.

“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!” Trump posted on Truth Social on Tuesday.

An attorney for Harvard didn’t immediately respond to a request for comment.

CNN has reached out to the Treasury Department, of which the IRS is a bureau, for comment.

Gary Shapely, whom Trump this week picked as acting IRS commissioner, has the authority to rescind the tax exemption under federal law. Doing so typically comes after the agency has made a determination that an organization has violated the rules that govern tax exemptions for not-for-profit entities.

Not-for-profit organizations that benefit from the tax exemption can lose it if they violate a number of rules, including for political activity.

But a rescission would be a rare move by the IRS.

In the 1980s, the agency revoked the tax exemption of a Christian college that the IRS determined had used a racially discriminatory admissions policy.

R. William Snyder, accounting and taxes professor at George Mason University’s Costello College of Business, told CNN, “To my knowledge, this is the first time an administration has tried something like this.”

Snyder added: “The whole purpose of higher education is to educate the masses. Just because they educate in a way that you don’t like, is that grounds to terminate their tax-exempt status? I’d say no.”

It’s unclear whether the IRS is considering such a move for other universities.

The Trump administration has threatened numerous colleges across the US with funding cuts if changes in school policy weren’t made, and Harvard’s resistance appears to mark the first time an elite university has rebuked the White House over those demands.

Trump on Truth Social on Wednesday escalated his attacks on the school, calling it a “joke” and saying it should no longer receive federal funds.

Marshall Cohen, Rene Marsh and Kara Scannell contributed to this report.

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