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Treasury, IRS set exempt organization guidance priorities for FY 2027

New projects highlight reporting, transparency and OBBBA guidance

October 01, 2026
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Federal tax Policy Tax policy Nonprofit

Executive summary: FY 27 Priority Guidance Plan items affecting exempt organizations

The Treasury Department and the IRS released their initial 2026-2027 Priority Guidance Plan (PGP) on Sept. 29, 2026, identifying projects that will receive priority attention during the federal fiscal year beginning Oct. 1, 2026, and ending Sept. 30, 2027.

For exempt organizations, the PGP includes five projects under a dedicated tax-exempt organizations category. The projects focus on section 501(c)(3) qualification and political activity; group exemption letters; donor-advised funds; and exempt organization information reporting, including fiscal sponsorship arrangements. The plan also includes projects outside the dedicated tax-exempt organizations section that directly affect exempt organizations, including regulations under sections 4945, 4960 and 4968.

Summary of the Treasury/IRS 2026-2027 Priority Guidance Plan

The 2026-2027 PGP contains 121 guidance projects, compared with 105 projects in the 2025-2026 plan, across several priority areas. Beginning with the 2026-2027 plan, the plan year aligns with the federal government’s fiscal year, which runs from Oct. 1 through Sept. 30, instead of the July-to-June cycle used in prior years.

Treasury and the IRS identified implementation of the One Big Beautiful Bill Act (OBBBA), deregulation and burden reduction, tax-exempt organizations, tribal tax issues, and digital assets as being among the plan’s priority areas.

PGP items affecting exempt organizations

Items in this year’s PGP directly affecting exempt organizations focus on OBBBA implementation, deregulation and exempt status qualification.

OBBBA implementation
  • Executive compensation: Regulations under section 4960 regarding excess compensation paid by applicable tax-exempt organizations, including the expanded definition of “covered employee.”

  • Private colleges and universities: Regulations under section 4968 regarding the endowment excise tax.
Deregulation and burden reduction
  • Private foundations: Regulations under section 4945 regarding expenditure responsibility requirements.

  • VEBAs: Regulations under section 4976 relating to welfare benefit funds, including voluntary employees’ beneficiary associations (VEBAs).

 

Tax-exempt organizations
  • Racial discrimination: Final regulations regarding the application of the fundamental public policy against racial discrimination, including consideration of recent case law, in determining the eligibility of private schools for recognition of tax-exempt status under section 501(c)(3). Proposed regulations were published Sept. 4, 2026.

  • Johnson Amendment: Guidance on the statutory prohibition in section 501(c)(3) against participation or intervention in political campaigns.

  • Group exemption letters: Guidance revising Rev. Proc. 2026-08 for certain types of group exemption letters.

  • Donor-advised funds: Guidance under sections 4966 and 6033 regarding certain donor-advised fund arrangements.

  • Fiscal sponsorship and information reporting: Guidance under section 6033 regarding exempt organization information reporting requirements, including with regard to fiscal sponsorship arrangements.

  • Executive compensation: Regulations under section 4960 regarding excess compensation paid by applicable tax-exempt organizations, including the expanded definition of “covered employee.”

  • Private colleges and universities: Regulations under section 4968 regarding the endowment excise tax.
  • Private foundations: Regulations under section 4945 regarding expenditure responsibility requirements.

  • VEBAs: Regulations under section 4976 relating to welfare benefit funds, including voluntary employees’ beneficiary associations (VEBAs).

 

  • Racial discrimination: Final regulations regarding the application of the fundamental public policy against racial discrimination, including consideration of recent case law, in determining the eligibility of private schools for recognition of tax-exempt status under section 501(c)(3). Proposed regulations were published Sept. 4, 2026.

  • Johnson Amendment: Guidance on the statutory prohibition in section 501(c)(3) against participation or intervention in political campaigns.

  • Group exemption letters: Guidance revising Rev. Proc. 2026-08 for certain types of group exemption letters.

  • Donor-advised funds: Guidance under sections 4966 and 6033 regarding certain donor-advised fund arrangements.

  • Fiscal sponsorship and information reporting: Guidance under section 6033 regarding exempt organization information reporting requirements, including with regard to fiscal sponsorship arrangements.

Guidance projects relevant to exempt organizations

The PGP also includes other items of interest to exempt organizations and their donors.

OBBBA implementation

Scholarship-granting organizations: Regulations under section 25F regarding the income tax credit for contributions by individuals to scholarship-granting organizations.

Deregulation and burden reduction
  • Split-interest trusts: Final regulations concerning reporting of charitable contributions of trusts under section 6034. Proposed regulations were published Aug. 17, 2026.

  • Public inspection: Regulations under section 6104 regarding the place for public inspection of materials relating to tax-exempt organizations, pensions, and other plans.
Tribal tax issues

Wholly owned entities: Regulations under section 139E regarding requirements for tribal general welfare benefits administered by Alaska Native corporations.

Scholarship-granting organizations: Regulations under section 25F regarding the income tax credit for contributions by individuals to scholarship-granting organizations.

  • Split-interest trusts: Final regulations concerning reporting of charitable contributions of trusts under section 6034. Proposed regulations were published Aug. 17, 2026.

  • Public inspection: Regulations under section 6104 regarding the place for public inspection of materials relating to tax-exempt organizations, pensions, and other plans.

Wholly owned entities: Regulations under section 139E regarding requirements for tribal general welfare benefits administered by Alaska Native corporations.

RSM insights: Prioritizing exempt qualification, reporting and transparency

The 2026-2027 Priority Guidance Plan suggests Treasury and IRS are concentrating guidance resources on issues involving exempt organization qualification, reporting requirements and transparency.

The 2026-2027 PGP largely retains the exempt organization projects from the prior year’s plan, with some adjustments to scope and form. The donor-advised fund project has shifted from final regulations under section 4966 in the 2025-2026 PGP to broader guidance under sections 4966 and 6033 regarding certain donor-advised fund arrangements.

One noteworthy addition is guidance regarding fiscal sponsorship arrangements. Fiscal sponsorship has become increasingly common throughout the nonprofit sector, but formal IRS guidance remains limited. Additional guidance under section 6033 could provide greater clarity regarding reporting expectations for sponsoring organizations and fiscally sponsored projects.

Several longstanding exempt organization projects that appeared in earlier PGPs are absent from the 2026-2027 PGP. These include regulations under sections 4958 and 4967 involving donor-advised funds; guidance regarding the allocation of expenses in computing unrelated business taxable income under section 512; guidance under section 4941 regarding a private foundation’s investment in a partnership in which disqualified persons are also partners; and regulations under section 457(f). Treasury and the IRS noted that omitted projects may be considered for inclusion in future plans.

RSM contributors

  • Lauren Nowakowski
    Senior Manager
  • Brianna Mooty
    Senior Manager

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