Whistleblower challenges Gates foundation’s tax-exempt status amid allegations of for-profit vaccine activities

• William S. Scott, an attorney, filed a whistleblower claim with the IRS in 2024, alleging that the Bill & Melinda Gates Foundation has engaged in for-profit activities related to COVID-19 vaccines, which should be taxed as ordinary income.
• The IRS denied Scott’s claim in 2024, leading Scott to file an appeal in federal court on Jan. 8, arguing that the foundation’s actions were not purely charitable.
• The case highlights the blurred lines between philanthropy and profit-making, particularly in the context of the foundation’s investments in vaccine manufacturers, which critics claim have created conflicts of interest and should be subject to taxation.
• The IRS has moved to dismiss the case, citing sovereign immunity and arguing that the court lacks jurisdiction. However, Scott contends that the IRS failed to conduct a proper investigation into his whistleblower claim.

In a high-stakes legal battle that could reshape the landscape of nonprofit accountability, a Florida whistleblower is pushing the Internal Revenue Service (IRS) to investigate the Bill & Melinda Gates Foundation’s alleged for-profit activities tied to COVID-19 vaccines. The case, which has drawn national attention, raises critical questions about the intersection of philanthropy, public health, and corporate profit—and whether one of the world’s most influential charitable organizations has crossed the line into commercial enterprise.

William S. Scott, an attorney and executive director of the World Peace Through Education Foundation, filed a whistleblower claim with the IRS in May 2024, alleging that the Gates Foundation has engaged in vaccine-related activities that should be taxed as ordinary income. The IRS denied his claim in September 2024, prompting Scott to file an appeal in federal court on Jan. 8.

“Under the pretense of improving World Health, Bill & Melinda Gates Foundation/Trust has been engaged in the promotion, manufacture, and sale of COVID-19 vaccines that were not sufficiently tested for safety or for effectiveness for their intended use,” Scott wrote in his appeal. He further accused the foundation of acting in “bad faith” by claiming its efforts are purely charitable.

The case is now before Chief Judge Cecilia Altonaga of the U.S. District Court for the Southern District of Florida, whose ruling could have far-reaching implications for the Gates Foundation and the broader nonprofit sector.

Philanthropy or profit-making

At the heart of Scott’s claim is the assertion that the Gates Foundation has blurred the line between philanthropy and profit-making. The foundation, which reported $6.8 billion in tax-exempt revenue in 2023, has long been a major player in global health initiatives, including vaccine development and distribution. However, critics argue that its investments in vaccine manufacturers have created significant conflicts of interest.

For example, in 2019, the Gates Foundation invested $55 million in BioNTech, a German company that later partnered with Pfizer to develop a COVID-19 vaccine. When the foundation sold its BioNTech shares at the height of their value in 2021, it reportedly earned a 20-to-1 return on its investment. Bill Gates himself has described this as his “best investment.”

Scott contends that such activities should be classified as for-profit transactions, subject to taxation. He is asking the court to compel the IRS to investigate and retroactively tax the foundation’s vaccine-related income.

Sovereign immunity and legal hurdles

The IRS has moved to dismiss Scott’s case, citing sovereign immunity—a legal doctrine that protects the federal government from lawsuits without its consent. In a December 20, 2024, motion, the agency argued that the court lacks jurisdiction and that Scott’s claims should be addressed through the U.S. Tax Court.

Scott, however, alleges that the IRS failed to conduct a proper investigation into his whistleblower claim. “Petitioner believes, and therefore asserts, that the IRS conducted no investigation to reach its decision to deny his Form 211,” he wrote in his amended appeal.

The case has also drawn scrutiny due to potential conflicts of interest. Matthew L. Paeffgen, one of the Department of Justice attorneys representing the IRS, previously worked for McDermott Will & Emery, a wealth management group that advised Smart Immune, a Gates Foundation partner. Critics argue that this connection raises ethical concerns and could undermine the impartiality of the IRS’s defense.

Nonprofits under the microscope

This case is not the first time a major nonprofit has faced challenges to its tax-exempt status. In 2015, Blue Shield of California lost its state tax-exempt status after regulators determined it was operating like a for-profit company. The Gates Foundation case could set a similar precedent, with implications for other large nonprofits that engage in commercial activities.

The IRS has also faced criticism in recent years for its handling of nonprofit applications. During the Tea Party scandal of 2013, the agency was accused of unfairly delaying tax-exempt status for conservative groups. More recently, the IRS has reported a backlog of approximately seven months in processing new applications—a stark contrast to the five-day response time in Scott’s case.

Implications for public health and philanthropy

If the Gates Foundation were to lose its tax-exempt status, the consequences would be significant. Based on 2023 figures, the foundation could face an estimated $1.44 billion in federal taxes annually. It would also lose the ability to offer tax deductions to donors, potentially impacting its fundraising efforts.

Beyond the financial implications, the case raises broader questions about the role of philanthropy in public health. The Gates Foundation has been a major funder of organizations like Gavi, the Vaccine Alliance, and the Coalition for Epidemic Preparedness Innovations (CEPI). Critics argue that such funding can skew research priorities and create conflicts of interest, particularly when the foundation has a financial stake in the outcomes.

“The conflict of interest apparent in a situation in which Gates receives tax deductions for money spent to fund entities designed to lobby or pressure governments to purchase vaccines in which Gates himself is a major investor, is obvious,” said journalist Naomi Wolf, CEO of Daily Clout.

Broader debate over transparency and accountability

The Gates Foundation case comes at a time of growing public skepticism about the influence of large donors on scientific research and public policy. Studies have shown that conflicts of interest are often underreported in clinical trials, with one 2016 review finding that 43% to 69% of research study reports failed to disclose such ties.

This lack of transparency has fueled calls for greater oversight of both nonprofits and federal agencies. The potential confirmation of Robert F. Kennedy Jr. as head of the Department of Health and Human Services (HHS) has added another layer to the debate. Kennedy, a vocal critic of vaccine mandates, has pledged to prioritize transparency and safety in vaccine research—a move that could further intensify scrutiny of organizations like the Gates Foundation.

Pivotal moment for nonprofit accountability

As the legal battle unfolds, the outcome could have profound implications for the Gates Foundation, the IRS, and the nonprofit sector as a whole. The case underscores the need for clearer guidelines on what constitutes charitable activity and how nonprofits should be taxed when they engage in commercial ventures.

For now, all eyes are on Judge Altonaga’s courtroom, where a decision could reshape the rules of philanthropy and public health for years to come. Whether the Gates Foundation’s activities are deemed charitable or commercial, the case has already sparked a much-needed conversation about transparency, accountability, and the true cost of doing good.

Sources include:

ChildrensHealthDefense.org

BrokenTruth.tv