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Trump Threatens Tax-exempt Status of Schools, Colleges

He wants statuses of those deemed to have political agendas analyzed

Last week, President Donald Trump said he’s instructing the Internal Revenue Service (IRS) to review the tax-exempt status of U.S. schools, colleges and universities deemed to have political agendas.

“Too many universities and school systems are about radical left indoctrination, not education,” Trump said on Twitter. “Therefore I am telling the Treasury Department to re-examine their tax-exempt status…and/or funding, which will be taken away if this propaganda or act against [his] public policy continues. Our children must be educated, not indoctrinated!”

Most public and private universities and colleges are tax-exempt organizations because of their educational purposes. The Trump administration has been pushing for schools and colleges to reopen this fall despite the still-looming threat posed by the coronavirus pandemic.

His tweets have not prompted any immediate response from the Treasury Department, and it is unclear what legal basis the administration would have for withholding funding or revoking tax-exempt status. The vast majority of funding for public elementary and secondary schools comes from state and local sources and colleges rely heavily on tuition and state aid.

White House spokeswoman Kayleigh McEnany said the president wants to “substantially bump up money for education” in the next COVID-19 relief package, but only for schools that reopen. McEnany said funding would be “tied to the student and not to a district where schools are closed.”

House Speaker Nancy Pelosi (D-CA) said federal funds for school systems and colleges are mostly through Title I and directed to assist children in economically disadvantaged areas and children with disabilities.

“You have to wonder if they really do believe in public education, which is the basis of a democracy,” Pelosi said in an interview on MSNBC.

The American Society of Association Executives (ASAE), which defends the free speech rights of associations and other tax-exempt organizations, said the administration’s threats to pull tax-exempt status are troubling and lack legal basis.

“The current administration’s threats to revoke the tax exemption of legitimate U.S. institutions on the grounds that they have differing viewpoints, or as a pressure tactic to force them to reopen during a pandemic, lack plausible legal basis,” said Susan Robertson, CAE, ASAE's president and CEO. “They amount to a bullying gambit intended to suppress free speech rights granted these institutions by the First Amendment. Tax-exempt institutions are granted favored tax treatment largely in recognition of the public benefits derived from their activities, and those organizations in compliance with strict guidelines for federal tax exemption should not be forced to divert time and resources from their purpose and mission to counter hollow intimidation.”

This article was provided to OSAE by the Power of A and ASAE's Inroads.

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