American Council on Education

The threat of losing tax exempt status would tighten the financial squeeze the administration has applied to higher education by withholding Federal research funding last year President Trump called For the IRS to strip Harvard of its tax-exempt status Which experts said would be contrary to a federal law prohibiting the IRS from carrying out politically directed audits while schools may still not owe much in federal income taxes even if they lose their tax-exempt status? The exemption is valuable because it allows donors to deduct donations they make directly to the school helping fundraising efforts.

The rules will take effect after May 31st and apply to as many as eighteen thousand Schools the treasury department said Education Groups indicated they would challenge the new rules Ted Mitchell the president of the American Council on Education Said the group will oppose the rule during the treasury department's public comment period The rule is likely to face a legal Challenge from the American Association of University Professors one senior official said Weaponizing the IRS to attack colleges and universities that uphold and expand civil rights is outrageous Said Todd Wolfson president of AAUP Which led a successful lawsuit against the trump administration's cuts to research funding at the university Of California Los Angeles This is blatantly racist political coercion intended to deny Minority Students reparative opportunities To further their education Beyond education the Trump Administration Has more broadly sought to Push the IRS to Be more aggressive In investigating left leaning Nonprofits Including those that Trump Officials accuse of Supporting terrorism Irs officials Have in recent weeks Discussed creating A faster process for revoking Tax Exempt Status From nonprofits According to people familiar With the conversations School's rebranding Race based preferences As Equitable Inclusive Or diversity enhancing Does not change Their discriminatory nature Treasury secretary Scott Besant Said in a statement Today's treasury And IRS Proposed Regulations Establish a clear standard And the institutions that continue To use Discriminatory practices Will no longer receive the benefits Of federal tax exempt status The Trump Administration Said the tax regulations Would draw on a Nineteen eighty Three supreme court case That found an organization Could not Receive tax exempt status If it was in Opposition to a Fundamental Public Policy In that Case the IRS Revoked the tax exempt status Of Bob Jones University A conservative Christian School Because the school had a policy Of banning interracial Relationships The Supreme Court upheld The IRS decision Because Racial Discrimination in education Violates a fundamental Public Policy But what counts as a fundamental Public Policy Has otherwise been largely Left undefined And the standard Has been rarely used To deny a Group's tax Exemption The Trump Administration First said Last Year That it would develop Guidelines on the application Of the fundamental Public Policy concept In June the treasury department Submitted regulations on the topic To a White House Regulatory office Which approved them last month Based on how the Trump Administration Has described Its Plans for the regulations Nonprofit Experts Had expected They will State that giving a preference To Black or Other Minority Applicants in Admissions Runs counter to fundamental Public Policy The administration said it would rely on a 2023 Supreme Court ruling in the Students for Fair Admissions case to set a standard for what counts as a fundamental public policy.

In the majority opinion in that case, Chief Justice John G. Roberts Jr. declared that any applicant must be treated based on his or her experiences as an individual, not on the basis of race.

He also said, though, that the court's opinion should not be construed as prohibiting universities from considering an applicant's discussion of how race affected his or her life, be it through discrimination, inspiration, or otherwise.