By Richard Rubin

WASHINGTON -- Republicans have contended for years that the Internal Revenue Service has been weaponized against conservatives. This week, it was President Trump who publicly raised the prospect of the agency removing a valuable tax benefit from a perceived opponent.

The Trump administration's attempt to revoke Harvard University's tax-exempt status could undercut the agency's attempts to assure the public that politics isn't part of tax enforcement.

In the Oval Office on Thursday, Trump alleged that the Biden administration engaged in "very, very illegal" use of the IRS for political ends. The president was then asked why his administration's moves against Harvard are different from what he accuses Democrats of doing. "Because I think Harvard's a disgrace. I think what they did was a disgrace," he said, describing the school as anti-Semitic.

Trump hinted at future actions against other universities and nonprofits, naming Citizens for Responsibility and Ethics in Washington, or CREW, a watchdog group suing the administration over records-law violations and other issues. CREW said it examined politicians from both parties and would continue its work.

Trump's comments continued a multipronged administration battle against the university. That includes a request for the IRS to cancel the tax exemption, which lets Harvard receive tax-deductible donations and avoid income taxes on net earnings.

The broadside against Harvard was a rare breach of the practice that senior administration officials don't direct specific IRS enforcement actions and avoid public discussion of disputes involving particular taxpayers, whether they are nonprofits or individuals.

IRS commissioners nominated by presidents of both parties repeatedly stress that politics don't determine who gets audited. That can be a challenging message to deliver, because legal questions about tax-exempt groups sometimes turn on examining their political activity. And it is difficult to prove or disprove allegations of bias. Taxpayer privacy laws prohibit the IRS from talking about any specific taxpayer. The agency doesn't disclose the factors that start audits for fear of tipping off would-be tax cheats.

"Central to the legitimacy of the tax system is the idea of impartial enforcement," said Larry Summers, the former Harvard president and Treasury secretary. "If this is not withdrawn promptly, I think we will have taken an important step toward being an authoritarian country."

Accusations and suspicions of politically motivated tax enforcement are frequent. Republicans point to IRS actions during the Obama administration. The agency apologized for giving improper scrutiny to Tea Party groups seeking nonprofit status as social welfare organizations. That episode, which undermined confidence in the IRS, was driven in large part by bureaucratic incompetence, not a specific White House directive.

More recently, Defense Secretary Pete Hegseth posted a photo of an IRS notice on social media and claimed the Biden administration was rushing a "sham" audit.

Democrats cite audits during Trump's first term of James Comey and Andrew McCabe, FBI leaders who the president frequently criticized. An inspector general's report found no misconduct and concluded they were chosen randomly for an IRS research project.

IRS leaders have made impartiality a consistent message for IRS workers.

"Federal agencies function better if front-line employees aren't second-guessing themselves about what will pass muster with higher-ups," said Mark Everson, who was IRS commissioner under President George W. Bush and declined to comment about Trump's statements.

Unlike the Federal Reserve, the IRS isn't formally independent. It is inside the Treasury Department and run by a commissioner chosen by the president. Trump this week picked Gary Shapley, an IRS investigator who criticized the government's handling of the Hunter Biden investigation, as acting commissioner.

Congress has set boundaries on political interference with the IRS. For example, it is a crime -- punishable with prison time and a fine -- for the president, vice president, White House staff and other senior officials to directly or indirectly ask the IRS to investigate or back off particular taxpayers.

A Tuesday post on Truth Social from Trump was framed as a question. "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?'" he wrote.

The White House sought to separate that comment from any actual inquiry into Harvard. Trump said Thursday that he isn't involved in the investigation.

"Any forthcoming actions by the IRS will be conducted independently of the President, and investigations into any institution's violations of its tax status were initiated prior to the President's TRUTH," said White House spokesman Harrison Fields.

Andy Grewal, a University of Iowa law professor, said independent tax administration is a norm that should be followed except in rare cases, but argued that criminalizing the president's ability to direct subordinates rewrites the Constitution. "The executive power is vested in the president, not in the IRS," Grewal said.

Even if they aren't deemed illegal, Trump's comments could still come up in litigation between Harvard and the IRS.

Harvard hasn't yet received a notice of any investigation, according to a person familiar with the matter. That would be a first step on the path to revoking its tax-exempt status.

Harvard could challenge the revocation in court and would have a very strong case, said Brian Galle, a tax law professor at Georgetown University. The Supreme Court, in a case involving Bob Jones University's racially discriminatory policies, said the IRS can revoke tax exemptions when nonprofits violate fundamental public policy, which Galle called a "ridiculously demanding standard" aimed at that circumstance.

Harvard, Galle said, would likely be able to find out when the investigation started and would point to Trump's comments in its arguments. "You're going to say this was a selective prosecution, motivated by political animus," Galle said.

Summers said he was concerned about the signal sent by Trump's comments.

" Richard Nixon understood that he was doing wrong and therefore hid it, " he said. "President Trump is shouting it from the rooftops, seeking to normalize what was previously criminal. That kind of impunity is a much greater threat to democracy."

Write to Richard Rubin at richard.rubin@wsj.com

(END) Dow Jones Newswires

April 17, 2025 20:18 ET (00:18 GMT)

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