President Donald Trump is weighing a crackdown on the tax-exempt status of left-wing groups, an exercise of executive power that would test his authority under the law.
Trump has directed the Internal Revenue Service to look into revoking Harvard University’s tax-exempt status and has said he is considering doing the same for the nonprofit watchdog organization Citizens for Responsibility and Ethics in Washington. He also reportedly plans to strip some environmental groups of their tax-exempt status.
In pursuing such measures, the administration could argue that the organizations broke rules designed to prevent them from engaging in political activity or violated other regulations.
Trump’s plan to go after these groups will invariably spark legal challenges and stretch the administration’s power in targeting organizations that it says have breached the bounds of their tax-exempt status.
The Internal Revenue Code says that it is not lawful for the president or any other executive officer to “request, directly or indirectly, any officer or employee of the Internal Revenue Service to conduct or terminate an audit or other investigation of any particular taxpayer with respect to the tax liability of such taxpayer.”
The Trump administration has asked the top IRS attorney to revoke Harvard’s tax-exempt status, the Washington Post reported this week. The request is specifically because of the university’s handling of antisemitism and diversity, equity, and inclusion 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?’” Trump said on social media. “Remember, Tax Exempt Status is totally contingent on acting in the PUBLIC INTEREST!”
Likewise, Trump told reporters that the administration is “looking at” CREW. The organization’s founder, Norm Eisen, is an attorney who was involved in Trump’s first impeachment.
“It’s supposed to be a charitable organization,” Trump said. “The only charity they had is going after Donald Trump. So we’re looking at that. We’re looking at a lot of things.”
CREW pushed back in a statement.
“For more than 20 years, CREW has exposed government corruption from politicians of both parties who violate the public trust and has worked to promote an ethical, transparent government,” the group said. “Good governance groups are the heart of a healthy democracy. We will continue to do our work to ensure Americans have an ethical and accountable government.”
The administration is also planning executive orders that could strip away the tax-exempt status of some environmental nonprofit groups, according to Bloomberg. Republicans have long accused environmental advocacy groups of getting funding from China and having ties to foreign governments.
Going after green groups would almost certainly spark court battles.
Joe Bishop-Henchman, executive vice president of the National Taxpayers Union Foundation, noted to the Washington Examiner that the Supreme Court held in Bob Jones University v. United States in 1983 that the IRS can revoke an organization’s tax-exempt status if it violates public policy.
“I think if the administration follows very closely the precedent laid out there, then, yeah, they can do it,” Bishop-Henchman said.
Bishop-Henchman said his group doesn’t hold a position on the matter but urges the administration to keep it to policy rather than politics.
“If it were to come out that it’s not about underlying policy, but about using the IRS to play politics with your political enemies, that’s something we’ve opposed from President [Richard] Nixon to now,” he said.
HERE ARE THE MAJOR DILEMMAS FACING THE GOP AS IT WRITES TAX OVERHAUL
Unfair IRS treatment of tax-exempt political or ideological groups has long been a contentious topic in Washington. During the Obama administration, Republicans were outraged when the IRS acknowledged that it had subjected some conservative and Tea Party groups to heightened scrutiny in applying for tax-exempt status.
The scandal led to hearings and investigations by Republicans and diminished funding for the tax agency.
