KSBE Seeks to Join Tribal Schools Exempted from Proposed IRS Discrimination Rules
by Andrew Walden
In an effort to stamp out racial discrimination against Asians and whites, the Trump administration Internal Revenue Service is moving to terminate the tax-exempt non-profit 501c3 status for private schools which have for decades engaged ‘affirmative action.’
The IRS proposals are dated September 4, 2026, and published in the Federal Register as Document: 2026-18127 (91 FR 56811). They contain one clarification relevant to Indian Law:
(c) Private school defined. For purposes of this section, the term private school … does not include a governmental unit, an agency or instrumentality of a governmental unit, or an organization that is owned or operated by an agency or instrumentality of a governmental unit. For purposes of this definition, the term governmental unit means the United States, a State, an Indian Tribal government (within the meaning of section 7701(a)(40) of the Code), the District of Columbia, a possession of the United States, or a political subdivision of any of the foregoing.
The rules are set to take effect on or after May 31, 2027. The IRS is currently accepting public comments. A public hearing in Washington, DC, is scheduled for Dec. 2, 2026.
Kamehameha Schools submitted comments November 3, 2026. Their arguments based on Indian Law signal Kamehameha Schools strategy against the latest round of admission policy lawsuits. Interestingly, Kamehameha Schools attorneys find support in some recent Trump Administration administrative law.
Here are a few key passages:
…the United States has consistently engaged with Native Hawaiians as a distinct indigenous community within the framework of federal law, alongside American Indians and Alaska Natives. This federal fundamental public policy toward Native Hawaiians is reflected across all three branches of government. It is not the product of a single statute, a single administration, or a single court. For more than a century, the Executive Branch, Congress, and the federal judiciary have each independently and repeatedly recognized the unique political and trust relationship between the United States and Native Hawaiians as the indigenous people of a sovereign nation. That convergence of all three branches is precisely the kind of evidence the Supreme Court relied upon in Bob Jones to identify a fundamental public policy, 461 U.S. at 592–95, and here it points decisively in favor of—not against—accommodating Kamehameha Schools’ historic practice of providing limited admissions preferences for Native Hawaiians.
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More recently, (Nov 15, 2021 under first Trump Administration—editor) the Secretaries of the Interior and Agriculture directed their Departments to manage federal lands and waters to protect the “treaty, religious, subsistence, and cultural interests of federally recognized Indian Tribes including the Native Hawaiian Community,” recognizing that “[t]he Native Hawaiian Community has a government-to-sovereign relationship” with the United States.5
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Executive Branch recognition of the unique status of Native Hawaiians and continued support for federal programs that selectively benefit Native Hawaiians continues under the current Administration. For example, an April 25, 2025, letter from the Department of Education, Office of Elementary and Secondary Education confirmed that:
The United States has a unique political and legal relationship with federally recognized Indian Tribes, as set forth in the Constitution of the United States, treaties, executive orders, and court decisions. [The Department of Education] continue[s] to deliver on all statutory grant programs that support American Indian, Alaska Native, and Native Hawaiian students and [is] identifying ways to deliver support while reducing bureaucratic red tape and ensuring parental rights remain a national priority.8
More recently, in pending litigation challenging the legality of housing preferences for Native Hawaiians provided for under the Hawaii Admission Act, Pub. L. No. 86-3, 73 Stat. 4 (1959) (the “Admission Act”), and the Hawaiian Homes Commission Act, 1920, Pub. L. No. 67- 34, ch. 42, 42 Stat. 108 (1921) (the “HHCA”), the Department of Justice argued to the court that it would fairly and adequately defend the case against those challenges, an argument the District Court accepted.9
These recent statements by the Department of Education and the Department of Justice are consistent with the position that the Proposed Regulations should be construed to operate independent of, and therefore accommodate, the fundamental public policy favoring preferences for Native Hawaiians.
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In its 1999 Technical Advice Memorandum (“1999 TAM”) issued to Kamehameha Schools,10 the IRS also discussed the well-documented Congressional history regarding legislative actions that demonstrate a “historical and legal obligation to the Native Hawaiian people”: the Native Hawaiian Education Act, Hawaiian Homes Commission Act, Hawaiian Statehood Admission Act of 1959, Native Hawaiian Health Care Act of 1988, Native American Languages Act, Native American Programs Act of 1974, American Indian Religious Freedom Act, Native American Graves Protection and Repatriation Act, and the National Historic Preservation Act.
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In light of this clear public policy, the regulations should accommodate the specific treatment for Native Hawaiians provided for by Kamehameha Schools in its admissions practices and otherwise.
Kamehameha Schools respectfully requests that Treasury and the IRS revise the Proposed Regulations to reaffirm their longstanding position and accommodate Kamehameha Schools’ admissions policy and other programs and practices that provide limited preferences to Native Hawaiians by excluding Kamehameha Schools from the definition of private school alongside the exclusion for Indian Tribal Governments.
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Nov 2025: Kamehameha Admissions: Without Affirmative Action Defense, Who Needs Victimology?
June 2026: Lawsuit: Hawaiian Homelands Will Win Because OHA Lost
PDF Nov 2026: Full Text KSBE Comments on Proposed IRS Rule
KHON Nov 2026: IRS rule puts private school tax exemptions at risk
KSBE Nov 2026: Statement on Response to IRS Rule