Exempt organizations matters on 2024-2025 Priority Guidance Plan

ARTICLE | October 09, 2024

Authored by RSM US LLP

Executive summary: FY 25 Priority Guidance Plan items affecting exempt organizations

The Treasury Department and IRS released the 2024-2025 Priority Guidance Plan (PGP), identifying a list of projects that are priorities for allocating Treasury and IRS resources for the plan year (July 1-June 30). For exempt organizations, the PGP identifies 10 items affecting exempt organizations, including a new project to issue guidance illustrating the application of section 501(r) regulations to tax-exempt hospitals. In addition, a number of charitable giving projects, employee benefits projects, and clean energy incentive projects could affect exempt organizations.

Summary of 2024-2025 Priority Guidance Plan

The PGP contains 231 guidance projects for the 12-month period from July 1, 2024, through June 30, 2025, including 17 projects that have been completed as of Aug. 31, 2024. For exempt organizations, the newly released PGP primarily repeats the guidance projects from 2023-2024, replacing the completed supporting organization regulations project with a new guidance project to illustrate the application of the section 501(r) regulations for tax-exempt hospitals. Of the remaining nine items, four pertain to donor advised funds (DAFs), demonstrating Treasury’s and the IRS’s focus on DAFs and their stakeholders.

The specific projects listed under Exempt Organizations are as follows:

1. Group exemptions: Guidance revising Rev. Proc. 80-27 regarding group exemption letters. Notice 2020-36 was published on May 18, 2020.
2. Tax-exempt hospitals: Guidance illustrating the application of the regulations under section 501(r) pertaining to tax-exempt hospitals.
3. Unrelated business income: Regulations under section 512 regarding the allocation of expenses in computing unrelated business taxable income (UBTI) and addressing how changes made to section 172 net operating losses by the CARES Act apply for purposes of section 512(a)(6).
4. Qualified tuition programs: Guidance addressing the SECURE 2.0 Act changes relating to section 529.
5. Self-dealing: Guidance under section 4941 regarding a private foundation’s investment in a partnership in which disqualified persons are also partners.
6. DAFs: Regulations under section 4966 regarding DAFs, including excise taxes on sponsoring organizations and fund management. Proposed regulations were published on Nov. 14, 2023.
7. DAFs: Regulations under section 4967 regarding prohibited benefits, including excise taxes on donors, donor advisors, related persons, and fund management.
8. DAFs: Regulations under section 4958 regarding DAFs and supporting organizations.
9. DAFs: Guidance regarding the public support computation with respect to distributions from DAFs.
10. Churches: Regulations designating an appropriate high-level Treasury official under section 7611. Proposed regulations were published on Aug. 5, 2009.

Other projects affecting exempt organizations include those related to charitable giving, employee benefit plans, and clean energy incentives.

Charitable giving

1. Guidance under section 170 regarding charitable contributions.
2. Guidance under section 170 regarding conservation easements, including façade easements.
3. Final regulations under section 6011 identifying a transaction involving certain uses of charitable remainder annuity trusts (CRATs) as a listed transaction. Proposed regulations were published on March 25, 2024.

Employee benefits

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

Clean energy incentives

1. Guidance under section 30C on the alternative fuel vehicle refueling property credit.
2. Guidance under section 45W on the credit for qualified commercial clean vehicles.
3. Final regulations under section 48 on the energy credit. Proposed regulations were published on Nov. 22, 2023.
4. Final regulations under section 48E on the clean electricity investment credit. Proposed regulations were published on June 3, 2024.