OAN Staff James Meyers and Brooke Mallory
4:31 PM – Friday, May 2, 2025
President Donald Trump said on Friday that “we,” referring to his administration, would be revoking Harvard University’s tax-exempt status — rebuking the school’s failure to address rampant anti-Semitism and anti-Israel sentiment on campus and in classes.
Although a U.S. president doesn’t have the legal authority to unilaterally revoke a university’s tax-exempt status, the Internal Revenue Service (IRS) does. The IRS can initiate a formal legal process to revoke tax-exempt status, typically involving evidence that the institution has violated the requirements of Section 501(c)(3) of the Internal Revenue Code, such as engaging in substantial political activity or violating established public policy.
The school is then notified and given an opportunity to appeal
The IRS is led by Acting Commissioner Michael Faulkender. He was appointed on April 18th, 2025, by Treasury Secretary Scott Bessent — President Trump’s treasury secretary. Faulkender’s statements have historically reflected loyal alignment with Trump’s agenda.
“We are going to be taking away Harvard’s Tax Exempt Status. It’s what they deserve!” the president said in a Truth Social post.
The latest move against the Ivy League school comes after the Trump administration paused $2.2 million in multiyear federal grants, over the school’s refusal to crack down on anti-Israel protests and Jewish hatred on campus.
In response, Harvard President Alan Garber claimed that Harvard has taken steps to combat anti-Semitism by clarifying campus policies regarding discrimination to encompass Jewish and Israeli identities, by strengthening disciplinary measures for infractions, and by expanding kosher dining options on campus.
Nonetheless, at that time, Trump had mentioned the idea of going after the school if it continued to push “political, ideological, and terrorist inspired/supporting ‘Sickness?’” on its students.
“Remember, Tax Exempt Status is totally contingent on acting in the PUBLIC INTEREST!” he said.
Most universities are tax-exempt since they are considered to be operating for public educational purposes. However, a U.S. university can have its tax-exempt status taken away if it is caught engaging in prohibited political activity or substantial lobbying — which is the most likely reasoning that the IRS, under President Trump, would argue if it were to hypothetically retract its 501(c)(3) status.
As it remains true that federal tax law still prohibits a president or other senior officials from calling for an IRS employee to carry out an audit or investigation, in order to demonstrate that the IRS is acting under presidential influence, rather than independently, in revoking a university’s tax-exempt status — a school would still need to present “substantial evidence” indicating political motivation behind the IRS’ actions.
Meanwhile, Harvard responded back by asserting that Trump’s remarks describe a situation that’s unlawful.
“There is no legal basis to rescind Harvard’s tax-exempt status,” a Harvard spokesperson responded in a statement. “The unlawful use of this instrument more broadly would have grave consequences for the future of higher education in America.”
The college’s tax exemptions have been a major factor to bring in the country’s largest university endowment, at close to $53 billion, from which it earned close to $2.4 billion in the 2024 fiscal year. The massive endowment proceeds fund close to 38% of its $6.4 billion operating budget. The school’s $686 million in annual federal funding makes up nearly 16%b of the operating budget.
In addition, Democrat Whip Katherine Clark of Massachusetts similarly called Trump’s Friday announcement an “illegal action.”
“Revoking Harvard’s tax-exempt status will have profound consequences far beyond its faculty and students. Harvard is a global leader in scientific research that produces cures and hope for patients and drives our innovation economy,” she said. “President Trump can’t change a fundamental truth: There are no kings in this country.”
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