China’s Tax-Deductible Operation to Influence American Students

Senators and law enforcement officials have expressed concern about the presence of the Confucius Institute on college campuses. The Trump administration demanded that it register as a foreign mission. It has been the subject of congressional investigations, a defense boycott, warnings from cabinet members, and scrutiny at the highest levels of government.

And yet multiple Confucius Institute branches are fundraising in the United States and the D.C. office, the Confucius Institute U.S. Center, remains a registered 501(c)(3) nonprofit with the IRS.

The Confucius Institute’s office on Embassy Row, just off Dupont Circle, less than a dozen blocks from the White House, is part of a global presence that stretches from D.C. to China.

And it’s one that has many government officials worried.

The FBI has expressed concern about the CCP front group. 2021’s National Defense Authorization Act blocked Defense Department funding for campuses where Confucius Institutes were embedded. That concern has not extended to the IRS which has targeted conservative nonprofits, but has shown no interest in an enemy front group’s nonprofit status.

To the IRS, conservative politics disqualify a nonprofit, but not foreign influence or Communism.

It is too busy scrutinizing $600 Venmo transactions by Americans to bother taking a closer look at an operation by our leading geopolitical enemy trying to manipulate American students. An organization whose presence, former Secretary of State Mike Pompeo and former Secretary of Education Betsy DeVos, warned “has never been more concerning,nor more consequential.”

Liu Yunshan, the Chinese Communist regime’s propaganda boss, declared that, “We should do well in establishing and operating overseas cultural centers and Confucius Institutes.”

The Confucius Institute was described as as “an important part of China’s overseas propaganda set-up.”

Assistant Secretary David R. Stillwell of the State Department warned that, “Confucius Institutes who work for the Hanban, who work for the Communist Party, cannot masquerade as benign academic activities institutions.” The State Department in 2020 was tracking “around 500 Confucius classrooms; these are K through 12. Each is affiliated with a university-based Confucius Institute. Right now, we’re tracking 75 Confucius Institutes operating in the U.S.”

Even as the FBI, the State Department and the Defense Department were coping with the Confucius Institute and its branches, the IRS was too busy fighting conservatives.

And as a registered nonprofit, the Confucius Institute was able to take in tax-free donations so that enemy propaganda was being subsidized by American taxpayers.

The Confucius Institute is not alone. The National Iranian American Council (NIAC), often described by Iranian dissidents as the “Iran Lobby” and accused of taking its orders from Tehran, is also a 501(c)(3) nonprofit. The Muslim Brotherhood built a vast network of 501(c)(3) nonprofits that spin off other nonprofits despite the fact that it is a foreign enemy organization.

But the IRS tolerance of the Confucius Institute is particularly glaring because multiple national security and foreign affairs arms of the government have warned about the Chinese organization. And while Democrats have obstructed oversight of the Confucius Institute, there has been some bipartisan criticism and support for more serious measures against the Institute.

Nor is it the only example of Chinese foreign influence.

The Committee of 100, which accused Republican candidates of racism before the 2022 midterms, is a 501(c)(3) that has been linked by some media outlets to organizations controlled by Communist China and its political allies. There are other nonprofits that have been accused of functioning as community groups while spreading Communist propaganda.

But it’s the Confucius Institute that remains the focus for many activists because of its large scope and its presence on college campuses. And because its status remains unique.

During the Trump administration, the State Department’s fact sheet actually noted that, “The Office of Chinese Language Council International (Hanban), an organization affiliated with the PRC Ministry of Education, has historically served as the Beijing-based parent organization of the Confucius Institute U.S. Center and, through it, supports many of the individual CIs. Filings with the Internal Revenue Service indicate that CIUS is directly funded by Hanban.”

How is it that the State Department can use IRS documents to show that the Confucius Institute is backed by the Chinese government, yet the IRS can’t seem to locate its own information?

Universities which profit from Confucius Institute cash have been the loudest defenders of the organization. The Brookings Institute, which is a neighbor of the Confucius Institute in D.C. and has a history of ties to foreign governments and influence operations, defended it. And Brookings remains one of the loudest voices in the Democrat foreign policy establishment.

The IRS leadership knows that an investigation of the Institute would not be welcome.

The Biden administration had dropped Trump’s proposed oversight of the Confucius Institute while the 2021 National Defense Authorization Act provided for a waiver for Department of Defense funding for colleges hosting the Communist group. Last year, Zhongsan Liu was convicted of fraud in a campaign to bring Chinese Communist recruiters working for their government to come to the United States. The case had ties to the Confucius Institute in Boston.

The status of the Confucius Institute demonstrates the extreme dereliction of the duty by the IRS to police foreign influence nonprofits. The Secretary of State and the Attorney General both warned of the Institute during the Trump administration. The FBI Director expressed his concern. The Justice Department has brought a case involving it, Congress has used defense spending to force it off college campuses and the IRS has documented the Confucius Institute’s ties to the Chinese government and yet it still refuses to do anything about its nonprofit status.

It’s busy chasing gig workers delivering pizza.

Internal Radical Service by David Horowitz and John Perazzo, a pamphlet from the David Horowitz Freedom Center, had exposed the abuses of the tax code by radical nonprofits. But not only does the IRS tolerate blatant violations by domestic leftist groups, it’s even willing to turn a blind eye to the activities of foreign leftists up to and including an enemy regime.

Allowing the Confucius Institute to function as a nonprofit allows China to gain access to Americans. After all the disproven claims of “foreign influence” on social media, the Biden administration and its allies have shown little interest in foreign influence in our classrooms.

And the IRS, by refusing to do its job, is enabling China’s funding of enemy propaganda in America. The failure by the Internal Revenue Service to act against other leftist nonprofits has damaged the economy and society, it has also cost lives, but the refusal of the IRS to act against the Confucius Institute treasonously threatens American national security.