Those Who Know the Rules Control the Game: Why A Proposed IRS Rule Would Be Detrimental to Private HBCUs and Historically Black Boarding Schools

My grandfather used to say, “your enemies plan, while you are asleep.” As I continue to live, learn, and grow, I am reminded of his words. As we prepare to vote on Wisconsin’s three state constitutional amendments next Tuesday, the United States Internal Revenue Service is quietly reshaping our institutions while most of us are busy living our lives. The proposed rule the Internal Revenue Service published on September 4, 2026, is one our community cannot afford to sleep on.

On its face, the rule sounds like something no one could oppose. It says a private school cannot keep its federal tax exemption if it discriminates based on race, color, or national or ethnic origin in its admissions, scholarships, athletics, or other programs. I agree with that principle. Black Americans fought, bled, and litigated to make it the law of the land.

But the details matter. And when you read past the headline, you find language that should give every Historically Black College and University, every historically Black boarding school, and every family that depends on them serious pause.

The proposal, known as REG-119986-25, would add a new section to the federal tax regulations. It covers private K-12 schools, colleges, universities, and trade schools, including schools that receive no federal money at all. Treasury estimates it could touch about 18,000 private schools.

The most striking line says that all forms of racial discrimination in education are against fundamental public policy "regardless of the intent behind or the legality of such discrimination." Read that again. Regardless of legality. A tax rule that reaches past what the law itself prohibits is a rule that needs a lot more explaining.

The proposal would also delete parts of sections 3.02 and 4.05 of Revenue Procedure 75-50. Since 1975, that guidance has told schools that programs favoring minority students in admissions, scholarships, and financial aid did not count as discrimination when their purpose was to advance a school's nondiscriminatory policy. Those protections would simply disappear, with little guidance on what replaces them.

If finalized, the rule would apply to taxable years beginning after May 31, 2027. For a school on a July-to-June fiscal year, that is the 2027-28 school year. That is not much time for small institutions to audit every scholarship, pipeline program, and donor agreement on their books.

Why our institutions should be paying attention

Let me be clear about something; HBCUs do not exclude anyone. They never have and they never will. While Predominantly White Institutions have a history of being closed to Blacks and other minorities in both law and custom, HBCUs have always opened their doors to students of every background, and many enroll a growing number of non-Black students. Nothing in this rule says an institution loses its exemption simply because of its history or its mission.

The risks lie in the gray areas. Private HBCUs depend heavily on tax-deductible gifts, because they have never had the endowments of their peer institutions. Many of those gifts come with donor restrictions written decades ago, in language that reflects the era they came from. Under a rule that treats any race-conscious language as disqualifying, regardless of purpose, a single outdated scholarship agreement could become a liability. Losing exempt status would mean taxes on net income and an end to tax-deductible giving. For a small private HBCU, that is not a paperwork problem. That is an existential one.

Then there are our boarding schools. A century ago, more than 100 historically Black boarding schools served children whose local governments would not educate them. Today only four remain: Laurinburg Institute in North Carolina, founded in 1904; The Piney Woods School in Mississippi, founded in 1909; Pine Forge Academy in Pennsylvania, founded by the Seventh-day Adventist Church in 1946; and Redemption Christian Academy, founded in Troy, New York in 1979.

These are small schools, with limited staff, and no army of tax attorneys. They survive on tuition, faith communities, alumni loyalty, and charitable gifts. They recruit in neighborhoods many prep schools never visit, and they lift students who might otherwise fall through the cracks. A vague rule, enforced without clear standards, puts schools like these at the greatest risk, not because they discriminate, but because they cannot afford to guess incorrectly.

I also worry about the chilling effect. When the rules are unclear, cautious boards cut programs rather than risk an audit. Outreach to under-resourced communities, mentoring programs, and need-based aid could all be scaled back out of fear, even when they are perfectly lawful. Students in Milwaukee and cities like ours would feel that loss first.

What the IRS should do before this rule is final

I am not asking the IRS to abandon the principle of nondiscrimination. I am asking it to write a rule that is clear, equitable, and grounded in the law. Specifically:

Define "discrimination" precisely. The definition should track governing law, not reach beyond it. The IRS must explain how the rule applies to remedial and diversity-related practices that remain lawful today. A standard that applies "regardless of legality" is not a standard schools can follow.

Explain and reconsider the deletions from Revenue Procedure 75-50. Sections 3.02 and 4.05 have guided schools for half a century. If parts must go, the IRS should preserve or replace the guidance on practices that are still legally permissible, so schools are not left in the dark.

Protect lawful, race-neutral access programs. Recruitment, outreach, scholarships, and student-support programs that are open to all should not be treated as suspect simply because they help close educational gaps. Serving under-resourced communities is not discrimination.

Set transparent enforcement rules. Schools deserve clear criteria, written notice of any concern, a real opportunity to respond and correct, and meaningful administrative review before anyone's exemption is put at risk.

Study the impact first. Before finalizing, the IRS should analyze how this rule will affect private HBCUs, small nonprofit schools, and the students who rely on access-expanding programs. Good policy measures its consequences before it imposes them, not after.

Make your voice heard

Public comments are due Tuesday, November 3, 2026 (yes, election day). You can submit them at Regulations.gov by searching for docket IRS-2026-1189 or REG-119986-25. A public hearing is scheduled for December 2, 2026.

You do not need to be a lawyer to comment. If you are a graduate of a private HBCU, parent of an HBCU student, tell the IRS what scholarships and programming dollars meant to you. If you or your child attended Piney Woods, Pine Forge, Laurinburg, or Redemption Academy tell them what that school made possible. If you sit on a school board or a church scholarship committee, tell them what you will have to cut if the rules stay this vague.

These institutions were built by people who refused to let anyone else define what Black children could achieve. They survived Jim Crow, desegregation, and decades of underfunding. They should not be lost to a regulation that never stopped to ask what it would cost them.

Nondiscrimination is a principle worth defending; protecting the institutions that have made it a reality for generations is also necessary. As former Lincoln University of Pennsylvania lecturer Albert Einstein once said, “You have to learn the rules of the game. And then you have to play better than anyone else”

To submit public comments on this rule, please visit www.regulations.gov under Docket No. FR Doc. 2026-18127 by Tuesday, November 3, at 11:59 p.m. ET.