SUBSCRIBE TO OUR FREE NEWSLETTER
Daily news & progressive opinion—funded by the people, not the corporations—delivered straight to your inbox.
5
#000000
#FFFFFF
5
#000000
#FFFFFF
internal revenue service
'This Is Welfare for Billionaire Tax Cheats': Trump IRS Ditches Effort to Close Major Loophole
"Donald Trump is a known tax cheat, and it's clear his core economic agenda is to turn the government into an ATM for his billionaire pals," said Democratic Sen. Ron Wyden.
Apr 18, 2025
The Trump administration quietly announced Thursday that it is abandoning a Biden-era effort to close a loophole that allows large business partnerships to repeatedly manipulate the value of their assets to minimize their tax obligations.
The Internal Revenue Service and Treasury Department announced the decision in a notice that received little attention in the mainstream press. The notice states that the administration, guided by an executive order President Donald Trump signed in February, intends to scrap so-called basis-shifting regulations that were finalized at the end of former President Joe Biden's White House term.
As the Biden Treasury Department explained last year, it was targeting a tactic whereby "a single business that operates through many different legal entities ('related parties') enters into a set of transactions that manipulate partnership tax rules to maximize tax deductions and minimize tax liability."
"These transactions defy congressional intent to avoid tax liability with little to no other economic consequences for the participating businesses," the department said. "For example, a partnership might shift tax basis from property that does not generate tax deductions (such as stock or land) to property that does (such as equipment). Taxpayers may also use these techniques to depreciate the same asset over and over."
The Biden administration estimated that the crackdown on basis-shifting would have raised $50 billion in federal revenue from wealthy taxpayers over a 10-year period.
Sen. Ron Wyden (D-Ore.), the top Democrat on the Senate Finance Committee, said in a statement Thursday that "this is a ridiculous loophole that allows the ultra-rich to dodge taxes by shifting assets around on paper while adding zero value to our economy whatsoever."
"Donald Trump is a known tax cheat, and it's clear his core economic agenda is to turn the government into an ATM for his billionaire pals, but that doesn't make it any less outrageous that his administration would reopen this kind of tax loophole for the rich while simultaneously wrecking Social Security and attacking Medicaid," Wyden added. "This is welfare for billionaire tax cheats and massive corporations, plain and simple."
The impending removal of IRS regulations targeting the rich comes as the administration is weaponizing the agency against nonprofits and immigrants and as congressional Republicans work on a legislative package that will likely call for massive tax breaks for the wealthy and large corporations.
A recent analysis by the nonpartisan Joint Committee on Taxation estimated that the GOP tax package could cost $7 trillion over the next decade, notwithstanding Republicans' misleading efforts to make the tax cuts appear free of cost.
While some congressional Republicans have floated the idea of allowing the marginal tax rate for the highest-earners to return to its previous level of 39.6% at the end of 2025, the proposal appears unlikely to garner enough support in both chambers.
"I think it is a mistake to raise taxes, and I don't believe Republicans are going to do that," Sen. Ted Cruz (R-Texas) told NBC News earlier this week.
According toBloomberg, the GOP's tax plan "will almost certainly" reflect "the priorities of a small minority of high-earning constituents in a handful of districts in New York, New Jersey, and California" as Republicans work to raise the state and local tax (SALT) deduction cap.
Bloomberg noted that the SALT deduction "is a write-off that most Americans will never claim, even in the districts of the lawmakers fighting hardest to increase the tax break."
Keep ReadingShow Less
Earth Day Massacre? Environmental Groups Fear Trump Ready to Take Aim at Nonprofit Status
"The rumors feel credible because this is the playbook they use," said one environmental funder. "That's why people are taking it very seriously."
Apr 17, 2025
Environmental groups are bracing for the Trump administration to potentially target their tax-exempt status, a move that could come down on Earth Day, this coming Tuesday, according to reporting from multiple outlets published Wednesday.
Rumors about such a move are swirling as the Trump administration is also reportedly considering plans to revoke Harvard University's tax-exempt status, a major escalation against the elite institution that critics said marks just the start of a broader assault on nonprofits that refuse to acquiesce to the administration's demands.
Fears that President Donald Trump will try to revoke environmental groups' tax-exempt status is the "rumor of the day that is flying around D.C.," Brett Hartl, the government affairs director at the nonprofit Center for Biological Diversity, toldE&E News. "There's lots of rumors about what terrible thing [Trump] wants to do on Earth Day, to just give everybody the middle finger."
Sources who spoke to Bloomberg Law on the condition of anonymity told the outlet that multiple conservation and environmental groups are preparing and assembling legal teams in response to the rumors. Per Bloomberg Law, a potential order from Trump could also seize groups' funding and designate them as domestic terrorists.
"We are trying to not panic, because we don't know what it is," Hartl told E&E News, though he added that environmentalists would "rally together and support each other."
Kieran Suckling, executive director for the Center for Biological Diversity, told Bloomberg Law that his organization is preparing for a potential order, and said the group would take legal action if it comes to pass.
501(c)(3) tax-exempt organizations, such as the Center for Biological Diversity and Earthjustice, are exempt from federal income tax and can collect tax-deductible donations.
The environmentalist and author Bill McKibben reacted to the reporting by remarking that the threat comes amid the "ongoing decimation of federally funded climate science."
"I know a great many of these people, and I admire their work endlessly; it's an honor to be counted among them, even if I'm only a volunteer," he said of those who work for green groups. "It was perhaps inevitable that Trump and his team would target us; together we've been making life harder for his clients in the fossil fuel industry. And in the new America, if you don't knuckle under you get a knuckle sandwich. Figuratively speaking. One hopes."
Only the Internal Revenue Service can investigate and revoke a tax exemption, and senior executive branch officials are explicitly barred from asking the IRS to conduct or cease an audit of a taxpayer, according to The Washington Post. There are some circumstances under which the IRS may revoke a tax-exempt status.
"Neither the president, the U.S. Department of Justice, the U.S. Department of the Treasury, or the IRS have the ability to revoke the federal tax-exempt status of any entity through executive order or with the mere stroke of a pen," wrote Jeffrey Tenenbaum, a nonprofit attorney, on Thursday.
The procedure for revoking federal tax exemption requires "individual case-by-case IRS audits of each organization, with ample opportunity for the entity to defend itself, and including multiple routes of appeal," he added.
CNN was first to report Wednesday that the IRS—where Trump has installed an ally as interim commissioner—is weighing whether to revoke Harvard's tax exemption, news that came a day after the president suggested on his social media platform Truth Social that "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?'"
According to E&E News, this suggestion by Trump in regard to Harvard has heightened environmental groups' concerns that the administration might take action against their tax-exempt status.
"The rumors feel credible because this is playbook they use," one environmental funder, who was granted anonymity, told E&E News. "That's why people are taking it very seriously."
Keep ReadingShow Less
'Deeply Disturbing': No Nonprofit Is Safe as Trump Targets Harvard's Tax-Exempt Status
"Today the organization being threatened by the government is Harvard, tomorrow it could be a community organization feeding the hungry or helping children with disabilities."
Apr 17, 2025
President Donald Trump's administration is reportedly considering plans to revoke Harvard University's tax-exempt status, a major escalation against the Ivy League institution that critics said marks just the start of a broader assault on nonprofits that refuse to bow to the White House's demands.
CNN was first to report Wednesday that the Internal Revenue Service—where Trump has installed an ally as interim commissioner—is weighing whether to yank Harvard's tax exemption, news that came a day after the president suggested on his social media platform that "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?'"
Earlier this week, the Trump administration froze over $2 billion in federal funding for Harvard after the university's president said the institution would not comply with the president's policy demands. Specifically, as The Harvard Crimsonreported, Trump called on Harvard to "derecognize pro-Palestine student groups, audit its academic programs for viewpoint diversity, and expel students involved in an altercation at a 2023 pro-Palestine protest on the Harvard Business School campus."
Alan Garber, Harvard's president, said in response that "no government—regardless of which party is in power—should dictate what private universities can teach, whom they can admit and hire, and which areas of study and inquiry they can pursue."
Sen. Ron Wyden (D-Ore.), the top Democrat on the Senate Finance Committee, warned in a statement Thursday that "if Trump gets away with weaponizing the tax system to target a political enemy, every American is at risk."
"The First Amendment and federal tax law make clear no president can raise a university's taxes because he doesn't like what they teach," said Wyden. "If this corrupt shakedown scheme stands, nonprofits from churches to temples to hospitals could be forced to echo Trump's MAGA line or see their taxes hiked. Any Republican who claims to believe in the Constitution and doesn't speak up is responsible for what happens next."
"We know this assault won't end with Harvard, so I will be fighting back—and I encourage every single American to stand up against it and make their voices heard."
Trump's attack on Harvard is part of a broader campaign of retribution against universities and other institutions and organizations that are unwilling to capitulate to his administration.
The Guardianreported last week that administration officials "have launched investigations into progressive and climate organizations, colleges, and recipients of government grants."
The Vera Institute of Justice, a nonprofit that fights mass incarceration, said Wednesday that the Elon Musk-led Department of Government Efficiency informed the group of "its plan to assign a DOGE team" to Vera "as part of its larger plan to assign DOGE teams to 'every institute or agency that has congressional monies appropriated to it.'"
"We are sharing this information broadly with other nonprofits that receive federal funding—so they can be aware of DOGE's plan to assign teams to investigate their operations," said Vera president Nick Turner. "We also are exposing this latest intimidation tactic targeting private, independent mission-driven organizations and undermining civil society."
Cole Leiter, executive director of Americans Against Government Censorship—a coalition formed late last year amid a Republican-led assault on nonprofits—said that the administration's decision to target Harvard's tax-exempt status makes clear that "they want to start shutting down organizations that present any sort of opposition to their goals or ideology."
"Today the organization being threatened by the government is Harvard, tomorrow it could be a community organization feeding the hungry or helping children with disabilities," said Leiter. "If the Trump administration decides it wants to target schools, groups, churches, or welfare organizations because they don't fall in line with their political agenda, it will open the door for any future administration to use this same unchecked power against more American citizens."
"This is a dangerous practice," Leiter added, "and it is one that should end before it ever begins."
An IRS decision on Harvard's tax status is expected imminently, according to CNN and The New York Times, which both cited unnamed people familiar with the matter.
The Times noted that "federal law bars the president from either directly or indirectly requesting the IRS to investigate or audit specific targets."
"The IRS does at times revoke tax exemptions from organizations for conducting too many political or commercial activities, but those groups can appeal the agency's decision in court," the newspaper continued. "Any attempt to take away Harvard's tax exemption would be likely to face a legal challenge, which tax experts expect would be successful."
Harvard said in a statement that the "unprecedented action" of revoking the university's tax-exempt status "would endanger our ability to carry out our educational mission."
"It would result in diminished financial aid for students, abandonment of critical medical research programs, and lost opportunities for innovation," the university said. "The unlawful use of this instrument more broadly would have grave consequences for the future of higher education in America."
Rep. Lloyd Doggett (D-Texas), who led the charge last year against Republican legislation that would have granted the Trump administration sweeping power to strip nonprofits of their tax-exempt status, said Wednesday that the threat to nonprofits "is re-emerging as Trump targets Harvard for standing for academic freedom against his war on higher education and intellectual inquiry."
Rep. Jerry Nadler (D-N.Y.) called the Trump administration's latest attack on Harvard "bullshit" and echoed others' warnings about the broader threat to nonprofits.
"This deeply disturbing and blatantly unlawful action is Trump's latest foray in his war to politicize higher education and degrade any institution that refuses to bend the knee," Nadler wrote on social media. "We know this assault won't end with Harvard, so I will be fighting back—and I encourage every single American to stand up against it and make their voices heard."
Keep ReadingShow Less
Most Popular