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Questions Raised About Purdue Global's Tax-Exempt Status

September 4, 2020

A review conducted by the Century Foundation raised questions about the documents Purdue University Global presented to the Internal Revenue Service when it applied for tax-exempt status in August 2019. 

Purdue University acquired for-profit Kaplan University from Graham Holdings in 2017, then used the acquisition to create a new online institution called Purdue University Global. Purdue Global relies on a Graham subsidiary, the educational services company Kaplan, to provide numerous support activities like financial aid administration, marketing, international student recruiting, business office functions and first-year student advising. Purdue Global acquired tax-exempt status from the IRS in December 2019.

Bob Shireman, director of higher education excellence and senior fellow at the Century Foundation, believes that the IRS was provided with misleading information about the nature of the deal between Purdue Kaplan. After reviewing documents provided by Purdue, Shireman said that Purdue Global excluded Kaplan from its list of contractors and failed to disclose Kaplan as an organization with which the university has a "close connection." 

“If IRS examiners had studied the Purdue Global deal thoroughly, they likely would have delayed 501(c)(3) approval, if not rejected it completely,” wrote Shireman, who served as deputy under secretary of education in the Obama administration. “Purdue, however, answered questions on the IRS forms on a range of topics in ways that managed to avoid triggering any deeper review.”

Shireman added that IRS tax-exempt determinations can be revoked retroactively “if the organization omitted or misstated a material fact.”

Purdue University denied that it misled the IRS in any way and questioned the accuracy of the Century Foundation analysis.

“We provided the IRS a complete and accurate description of the entire relationship with Kaplan, with cross-reference to the acquisition agreement and the services agreement, actual copies of which were attached to the exemption application,” said Tim Doty, director of public information and issues management at Purdue, in an email.

“This ongoing campaign from the Century Foundation is one more addition to a long lineup of factually inaccurate and legally spurious claims from an organization that bizarrely seems obsessed with preventing Purdue University from expanding higher education access to the corners of the country that need it most,” said Doty.

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Lindsay McKenzie

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