Tax alert

Treasury Priority Guidance Plan 2022-2023 – Exempt Organizations

New items suggest enhanced focus on donor advised funds

Nov 07, 2022
Federal tax Business tax Nonprofit

Executive summary: IRS and Treasury release updated Priority Guidance Plan

The Treasury Department and the IRS released the 2022-2023 Priority Guidance Plan, which contains a list of projects that are priorities for allocating Treasury Department and IRS resources for the plan year. For exempt organizations, the updated plan includes a number of guidance items related to donor advised funds.

2022-2023 Priority Guidance Plan

On Nov. 4, 2022, the Treasury Department and IRS released the 2022-2023 Priority Guidance Plan (PGP), containing 205 guidance projects for the 12-month period from July 1, 2022, through June 30, 2023. 

For exempt organizations, the newly released plan highlights the IRS and Treasury Department’s focus on tax issues related to donor advised funds. Of the ten items under the exempt organizations heading, four specifically address donor advised funds (DAFs) and their stakeholders, including donors and management.

Although prior PGPs included regulations governing DAFs, this year’s PGP expands one item into four separate items, suggesting that the IRS and Treasury may have specific guidance in mind: 

  • Regulations under section 4966 regarding donor advised funds, regarding the excise taxes on donor advised funds and fund management.
  • Regulations under section 4967 regarding prohibited benefits, including excise taxes on donors, donor advisors, related persons, and fund management.
  • Regulations under section 4958 regarding donor advised funds and supporting organizations.
  • Guidance regarding the public support computation with respect to distributions from donor advised funds.

Although DAFs were added to the Code in 2006, the only guidance issued by the IRS and Treasury was in Notice 2017-73, which set forth the IRS’s and Treasury’s suggested proposals that (1) distributions from DAFs that pay for the purchase of tickets that enable a donor/advisor/related person to attend or participate in a charity-sponsored event would result in a prohibited benefit under section 4967; (2) distributions from a DAF to a charity that the charity uses to fulfill a pledge would not result in a prohibited benefit under section 4967 assuming certain requirements were met; and (3) would change the computation of public support to prevent the use of DAFs to circumvent the treatment as a private foundation.

The additional eight projects listed under exempt organizations are as follows:

  • Guidance revising Rev. Proc. 80-27 regarding group exemption letters. (Notice 2020-36 published May 18, 2020.)
  • Final regulations on section 509(a)(3) supporting organizations. (Proposed regulations published February 19, 2016.)
  • Regulations under section 512 regarding the allocation of expenses in computing unrelated business taxable income and addressing how changes made to section 172 net operating losses by the Coronavirus Aid, Relief, and Economic Security (CARES) Act apply for purposes of section 512(a)(6).
  • Guidance under section 4941 regarding a private foundation’s investment in a partnership in which disqualified persons are also partners.
  • Final regulations under section 6104(c) related to disclosure of certain information to state officials. Final regulations published Aug. 16, 2022.
  • Final regulations designating an appropriate high-level Treasury official under section 7611 related to church audits. (Proposed regulations published Aug. 5, 2009.)

In addition, other projects affecting exempt organizations include those related to charitable giving and electronic filing waivers.

Employee benefits

  • Regulations and other guidance under sections 419A and 501(c)(9) relating to welfare benefit funds, including voluntary employees’ beneficiary associations (VEBAs).
  • Regulations under section 457(f) and related guidance on ineligible plans. Proposed regulations were published on June 22, 2016.

General tax issues

  • Guidance under section 170 regarding charitable contributions. 
  • Guidance under section 170 regarding conservation easements, including facade easements.

Tax administration

  • Guidance regarding waiver of mandatory electronic filing.

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