IRS and Treasury Release 2026–2027 Priority Guidance Plan: What Tax-Exempt Organizations Need to Know

The 2026–2027 Priority Guidance Plan addresses several topics that may impact tax-exempt organizations, some of which were also in the 2025–2026 Priority Guidance Plan. 

For ease of reference, we have grouped the items relevant to tax-exempt organizations by subject matter.

• Excise taxes on exempt organizations.

• Private foundations and donor advised funds.

• Exempt status and permitted activities.

• Reporting, disclosure, and exemption administration.

• Charitable giving incentives affecting donors.

Where relevant, we note where an item relates to implementation of the One Big Beautiful Bill Act (OBBBA) or is designated as a deregulation and burden reduction priority. 

Excise Taxes on Exempt Organizations

The 2026–2027 Priority Guidance Plan (Plan) includes two items regarding excise taxes imposed on certain tax-exempt organizations, both listed in the Plan’s OBBBA implementation category. 

• Section 4968 (Excise Tax on Investment Income of Certain Private Colleges and Universities): The OBBBA replaced the prior flat 1.4% excise tax with a three-tier structure based on a private college or university’s student adjusted endowment, making updated guidance particularly significant for affected institutions. The Plan includes regulations under Section 4968 regarding the excise tax on the net investment income of certain private colleges and universities. This item also appeared in the 2025-2026 Priority Guidance Plan (Prior Plan). 

• Section 4960 (Excise Tax on Excess Compensation): Section 4960 imposes an excise tax on certain tax-exempt organizations that pay an employee more than $1 million in a year. The OBBBA broadened the group of employees whose pay can trigger the tax by removing the requirement that the employee be one of the organization’s five highest-compensated employees. The Plan lists regulations under Section 4960 regarding this excise tax. This topic appeared generally in the Prior Plan but was identified as “guidance” generally under Section 4960 rather than “regulations.”

Private Foundations and Donor Advised Funds

The Plan includes items of particular interest to private foundations and sponsoring organizations of donor advised funds. One is listed as a deregulation and burden reduction item, and the other is listed in the Plan’s tax-exempt organizations category for new or revised guidance. 

• Section 4945 (Expenditure Responsibility Requirements for Private Foundations): Section 4945 of the Internal Revenue Code requires private foundations to exercise “expenditure responsibility” when making grants to organizations other than 501(c)(3) public charities, ensuring that grant funds are used for charitable purposes. Treasury regulations under Section 4945 currently detail these requirements, including pre-grant inquiries, reporting, and recordkeeping. The Plan, like the Prior Plan, lists this item as a deregulation and burden reduction item.

• Sections 4966 and 6033 (Donor Advised Funds): Section 4966 regulates donor advised funds (DAFs) and imposes excise taxes to mitigate abuse. The Plan includes guidance under Sections 4966 and 6033 (the annual Form 990 reporting rules) regarding certain DAF arrangements. Proposed regulations, published in November 2023, addressed several issues related to creating and administering a DAF. The Prior Plan listed final regulations under Section 4966 as an item aimed at reducing compliance burdens. The Plan no longer lists Section 4966 as an item for deregulation and reframes it as guidance on “certain” DAF arrangements with the added reporting component.

Exempt Status and Permitted Activities

The Plan includes guidance affecting the requirements for obtaining and maintaining tax-exempt status.

• Application of the Fundamental Public Policy Against Racial Discrimination: The Plan includes final regulations regarding the fundamental public policy against racial discrimination and its application to the tax-exempt status of private schools under Section 501(c)(3). Current requirements derive from longstanding IRS guidance and case law. This item appeared in the Prior Plan, and proposed regulations were recently published on September 4. 

• Johnson Amendment: The Plan includes guidance on the Johnson Amendment, which restricts certain tax-exempt organizations from participating or intervening in political campaigns. This item also appeared in the Prior Plan.

Reporting, Disclosure, and Exemption Administration

The Plan includes several items addressing how tax-exempt organizations report, disclose information, and administer their exemptions.

• Group Exemption Letters: The Plan includes guidance revising the IRS group exemption procedures for “certain types” of group exemption letters. It does not indicate which types of group exemption letters. The IRS finalized updated group exemption procedures in early 2026 (Rev. Proc. 2026-08); that update had appeared as an item in the Prior Plan. Central organizations holding group exemption letters should monitor any further revisions to these procedures.

• Section 6033 (Exempt Organization Information Reporting, Including for Fiscal Sponsorship Arrangements): The Plan adds a new item for guidance under Section 6033 regarding exempt organization information reporting, including fiscal sponsorship arrangements. This item did not appear in the Prior Plan. Organizations that serve as fiscal sponsors or that rely on fiscal sponsorship arrangements should monitor this item, as new reporting guidance could affect how these arrangements are structured and reported.

• Section 6104 (Public Inspection Requirements): The regulations under Section 6104 govern the public disclosure of information from tax-exempt organizations, such as exemption applications and annual returns, and outline the additional disclosure requirements to state officials. The Plan specifically references regulations “regarding the place for public inspection of materials relating to tax-exempt organizations, pensions, and other plans.” This item, targeted for deregulation, also appeared in the Prior Plan.

Charitable Giving Incentives Affecting Donors

Two items primarily affect donors and other taxpayers rather than tax-exempt organizations but may be relevant to fundraising and educational institutions.

• Section 25F (Income Tax Credit for Individual Contributions to Scholarship Granting Organizations): The Plan includes OBBBA implementation regulations under new Section 25F providing an income tax credit for contributions by individuals to scholarship granting organizations. This item appeared in the Prior Plan, and proposed regulations were just released on October 2. ArentFox Schiff will publish a separate alert summarizing the proposed regulations.

• Sections 529 and 530 (Qualified Tuition Programs and Qualified Education Expenses): The Plan includes guidance under Section 529 regarding enhancements to qualified tuition programs and under Section 530 regarding qualified elementary and secondary education expenses. These items reflect OBBBA-related changes and may be relevant to educational institutions. These items appeared in the Prior Plan.

The Plan sets no completion deadlines and may be updated during the year to reflect new priorities, newly published guidance, and legislative developments. 

ArentFox Schiff’s Nonprofits and Associations practice is closely monitoring developments under the Plan and will provide further updates as new guidance affecting tax-exempt organizations is released. Please contact your AFS attorney or the authors of this alert for additional information.