WSJ Talks to Government Sources on Effort to Target Liberal Tax Exempts
May 5, 2025
For the past three or four weeks rumors have run rampant in the nonprofit community that the Trump administration at some point quite soon would start revoking the exempt status of many environmental groups, prominent private foundations that they did not like, Harvard and some other universities. Indeed two weeks ago on Earth Day, this was supposed to happen. Then, Thursday that same week, it was supposed to happen.
But for the most part, it did not. Ed Martin did send a threatening letter to Wikipedia, Trump issued an executive order ordering the investigation of Act Blue, and Trump threatened a number of times that the IRS was going to revoke Harvard’s status.
Still, the IRS has not yet revoked any statuses. It may still happen.
The Wall Street Journal this past weekend though had the best story yet, Trump Officials Explore Ways of Challenging Tax-Exempt Status of Nonprofits with actual administration sources about this effort and names two IRS officials who are apparently central to the effort: Andrew De Mello (acting Chief Counsel) and Gary Shapley (who Trump appointed head of Criminal (and was Acting Commissioner for a day).
From the story: “Trump administration officials are exploring ways of challenging the tax-exempt status of nonprofits, according to people familiar with the matter, in a move that some IRS staffers fear could damage the agency’s apolitical approach.
In hourslong meetings that continued over a recent weekend, Internal Revenue Service lawyers explored whether they could alter the rules governing how nonprofit groups can be denied tax-exempt status, the people said.
The meetings started taking place shortly after the Trump administration appointed a new top interim lawyer at the agency, Andrew De Mello, whom Trump had nominated for a different post in his first term. De Mello privately discussed the nonprofit rules with agency officials, including those at the tax-exempt division, according to people familiar with the matter.
Another senior IRS official, Gary Shapley, separately said in at least one meeting that he’s giving priority to investigating the tax-exempt status of a select group of nonprofit organizations, according to people familiar with his remarks. Shapley made the comments as deputy head of the criminal investigations unit. Shapley, who is also an adviser to Treasury Secretary Scott Bessent, didn’t name any specific groups, the people said.”
I am quoted within: “None of this is normal,” said Phil Hackney, who advised the tax-exempt division commissioner as a lawyer at the IRS in the early 2000s.
Also, one nugget in there, worth noticing is the following: “In late 2024, lawyers at the IRS wrote a memo that said the 2023 Supreme Court ruling barring affirmative action at educational institutions shouldn’t affect nonprofits that support diversity goals through other programs.”