President Trump telling Treasury to look into tax-exempt status of universities, colleges

Posted at 12:37 PM, Jul 10, 2020

President Donald Trump continues his focus on educational institutions Friday, tweeting he is telling the Treasury Department to “re-examine their Tax-Exempt Status.”

Earlier this week, after declaring his opinion that schools should re-open this fall, and reports this week that universities and colleges were considering online classes, the president tweeted he “may cut off funding if (U.S. schools) not open.

Friday, the president was more specific, stating he is having treasury look into universities and colleges.

According to theAssociation of American Universities, the vast majority of public and private universities and colleges are tax-exempt entities. They qualify under the internal revenue code section 501(c)(3) because of their educational purpose.

That section includes “corporations, and any community chest, fund, or foundation, organized and operated exclusively for religious, charitable, scientific, testing for public safety, literary, or educational purposes…”

The Internal Revenue Service oversees their tax-exempt status and requires paperwork be filed each year. “Institutions are required to report on their mission, revenues, expenditures, endowments, salaries and benefits of top officials, charitable gifts, lobbying activities, and more,” according to AAU, and that information is made available to the public.

In addition, the IRS watches charitable giving to tax-exempt institutions. While tax-exempt institutions don’t pay income tax, they do pay other taxes, like payroll taxes on employees.

The IRS directly reports to the Secretary of the Treasury, Steven Mnuchin.

There is no information on a timeline for such an investigation by the Treasury Department as the president is suggesting.