Treasury Plan Targets DAFs, Nonprofit Reporting Rules
At the end of September, Treasury and the Internal Revenue Service released their 2026-2027 Priority Guidance Plan, which outlines the Administration’s regulatory priorities in the tax space. This year’s PGP includes plans to finalize the recently proposed racial nondiscrimination regulations for private schools, issue guidance on the Johnson Amendment (that is, a provision in the Tax Code that bans all Internal Revenue Code Section 501(c)(3) tax-exempt organizations, including charities, universities, foundations and houses of worship, from endorsing or opposing political candidates), issue guidance on donor-advised funds and address other matters concerning the charitable sector. Importantly, the PGP doesn’t signal what the outcome of any new guidance or regulations may be, and it may not necessarily represent all of Treasury’s active work.
The 2026-2027 PGP reinforces that reforming regulations governing the nonprofit sector across multiple fronts is a priority for the Trump Administration. Even if Congress is divided next year and less productive, there are still likely to be multiple policy reform efforts originating from the Administration that could significantly affect the sector. There will be opportunities for stakeholders to engage with policymakers and participate in the regulatory process as these proposals materialize. Stay tuned.
DAFs
The PGP includes “Guidance under §§4966 and 6033 regarding certain donor advised fund arrangements.” The guidance under IRC Section 4966 is likely a reference to the DAF regulations proposed in 2023, which raised significant concerns about how they could reduce giving through the vehicle. The mention of IRC Section 6033 is new, however, and could indicate regulators are working on additional reporting requirements for DAF sponsors, as that section outlines nonprofits’ annual reporting requirements.
During an American Bar Association event last week, an IRS official said guidance on DAFs addressing some of the most frequently raised concerns about the 2023 proposed regulations will be released soon. It’s unclear when “soon” is, as agency officials have made similar comments about near-term actions on the DAF regulations at other conferences over the past year.
Form 990 Changes
The PGP includes “Guidance under §6033 regarding exempt organization information reporting requirements, including with regard to fiscal sponsorship arrangements.” This priority likely stems from Treasury’s Form 990 Transparency Initiative announced in April. While Treasury has already confirmed it’s working on regulations to address reporting requirements for fiscal sponsorship arrangements, this item may extend beyond those arrangements to other non-profit reporting.
Applicability of IRC Section 68 to Trusts and Estates
The PGP includes issuing “Guidance under §§67 and 68 regarding deductions of certain trusts and estates.” This regulatory priority wasn’t included in last year’s PGP, but stakeholders have raised concerns about how the new Section 68 limit on itemized deductions, including charitable deductions, applies to trusts and estates. It’s unclear what the agencies plan to do in this forthcoming guidance, but stakeholders have urged the agencies to blunt the impact of this limitation enacted in the One Big Beautiful Bill Act (OBBBA) on trusts and estates.
For the implementation of the OBBBA, the PGP didn’t include plans to issue guidance on changes to charitable giving incentives, including the new non-itemizer charitable deduction and new floors on individual and corporate charitable deductions. These items also weren’t included in last year’s PGP, and whether the agencies plan to issue guidance on them remains to be seen.
