Trump Moves to Strip Tax Exemption From Schools That Aid Minority Students

The Trump administration released new rules that could revoke tax-exempt status from any school offering targeted support to Black or other minority students, a sweeping change that opens another front in the president’s campaign to reshape American education.

The proposed regulations, which the Treasury Department published on Thursday, would add another element to the guidelines that schools and other organizations must follow to qualify for tax-exempt status with the Internal Revenue Service. The rules would deny tax-exempt status to any school, including secondary schools and universities, if it has any policy or program, including admissions and scholarships, that the I.R.S. finds to be racially discriminatory.

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“Schools rebranding race-based preferences as equitable, inclusive or diversity-enhancing does not change their discriminatory nature,” Treasury Secretary Scott Bessent said in a statement. “Today’s Treasury and I.R.S. proposed regulations establish a clear standard, and the institutions that continue to use discriminatory practices will no longer receive the benefits of federal tax-exempt status.”

The Trump administration said the tax regulations would draw on a 1983 Supreme Court case that found an organization could not receive tax-exempt status if it was in opposition to a “fundamental public policy.” In that case, the I.R.S. revoked the tax-exempt status of Bob Jones University, a conservative Christian school, because the school had a policy banning interracial relationships. The Supreme Court upheld the I.R.S. decision because “racial discrimination in education violates a fundamental public policy.”

But what counts as a fundamental public policy has otherwise been left largely undefined, and the standard has been rarely used to deny a group’s tax exemption. The Trump administration first said last year that it would develop guidelines on the application of the fundamental public policy concept. In June, the Treasury Department submitted regulations on the topic to a White House regulatory office, which approved them last month.

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