As the Donald Trump administration threatened to revoke Harvard University's nonprofit tax-exempt status, major foreign media pointed out that the president's unilateral move is not legally possible under current law.
According to the Washington Post (WP) on the 16th, the Trump administration demanded that the Internal Revenue Service (IRS) revoke Harvard University's tax-exempt status. Earlier, President Trump claimed that “Harvard is spreading a 'disease' that supports political, ideological, and terrorist tendencies, so it should be considered a political organization and subject to taxation.”
According to WP, the IRS allows organizations recognized as nonprofit entities to receive federal income tax exemptions if they pursue purposes such as ▲charity ▲religion ▲education ▲science ▲literature ▲public safety testing ▲amateur sports ▲prevention of child and animal abuse.
Universities, including Harvard, are classified as educational institutions and thereby benefit from federal income tax exemptions. For the same reason, Massachusetts, where Harvard is located, also exempts state taxes. Harvard does not pay taxes but has made voluntary contributions (PILOT) to the city of Cambridge. In 2024, it paid $4.7 million (approximately 6.67 billion won), and over the past 10 years, cumulative contributions have reached $42 million (approximately 59.58 billion won).
However, tax-exempt institutions, including universities, are prohibited from participating in political activities. Citing this, President Trump has linked Harvard's diversity policies to a specific political inclination, froze federal subsidies, and claimed that the university should be stripped of its tax-exempt status, saying that it supported terrorism regarding Harvard students' protests related to the Israel-Hamas war.
However, President Trump has no clear legal basis to revoke Harvard's tax-exempt status. According to reports, only the IRS has the authority to change an organization's tax-exempt eligibility, and the president's demands for the IRS to take action against specific taxpayers are prohibited by law. Violating this can lead to a fine of up to $5,000 (approximately 7.1 million won) and a five-year prison sentence.
Sam Brunson, a professor at Loyola University Chicago School of Law, noted to WP, “The Trump administration has no legal grounds to revoke the tax-exempt status, and Harvard is in a strong position to respond.”
There is a precedent for the IRS revoking a university's tax-exempt status. About 50 years ago, the IRS rescinded Bob Jones University's tax-exempt status, citing the university's discriminatory policies, which allowed unmarried Black students but denied admission to married mixed-race students.
Meanwhile, tax-exempt status is one of the key factors in reducing the budget burden of universities. If Harvard loses its tax-exempt eligibility, it will face the situation of needing to pay millions to billions of dollars in taxes annually. As of 2024, Harvard's fund is $53.2 billion (approximately 75.4 trillion won).