AIR Joins Higher Education Coalition Opposing IRS Tax-Exempt Status Proposal

The Association for Institutional Research (AIR) has joined more than 40 higher education associations on an October 29, 2026, comment letter urging the Internal Revenue Service (IRS) to withdraw or narrow a proposed rule that would let the agency revoke or deny an institution’s tax-exempt status when it finds the institution engaged in racial discrimination.

Led by the American Council on Education (ACE), the letter responds to the proposed rule, REG-119986-25, published at 91 Federal Register 56,811. The signatories argue the proposal exceeds the IRS’s authority under Section 501(c)(3) of the Internal Revenue Code and departs from the U.S. Supreme Court’s standard in Bob Jones University v. United States, which they read to require discrimination that’s intentional, substantial, and pervasive. They also raise First and Fifth Amendment concerns, contend the rule would permit revocation without notice or a hearing, and warn of financial harm to institutions and students.

For Institutional Research and Effectiveness (IR/IE) professionals, tax-exempt status underpins much of the financial data they analyze and report. The letter cites about $78.8 billion in charitable support to higher education in fiscal year 2025 and notes that 47.4% of endowment spending in 2025 went to student financial aid.

AIR is one of 46 signatories, a group that spans research universities, community colleges, and independent institutions.