The TEGE Exempt Organizations Council, in cooperation with D.C. Bar Continuing Legal Education and The Greater Washington Society of CPAs, provided a webinar update on November 21, 2025. Here are some highlights and my notes from the webinar with additional links to some supplemental resources:

Beyond the Bill: Navigating the Implementation and Impact of 2025’s New and Upcoming EO Tax Rules

• key provisions – see, e.g., How OBBB Could Affect Tax-Exempt Organizations (Crowe)
• look back at 2017 reforms (Tax Cuts and Jobs Act) for possible lessons about unintended impacts of OBBBA – see, e.g., Analysis of the 2025 Tax Bill and Its Impact on Charitable Nonprofits (National Council of Nonprofits)
• frontloading of charitable contributions in 2025, which may affect giving in 2026 – what charities will be impacted and will they be prepared for the possible reduction – see, e.g., How OBBBA alters charitable deduction strategies for 2025 and 2026 (Journal of Accountancy)
• 2025-2026 Treasury Priority Guidance Plan
• legislative horizon – 4940 (excise tax on private foundation investment income) and 501(p) (e.g., TG 45: Suspension of Tax-Exempt Status of Terrorist Organizations under IRC 501(p)) may come back around (see, e.g., H.R. 9495: What’s Next?); DAF laws; state laws supporting or opposing federal administration priorities
• what should nonprofits do? – align and make sure your organization takes consistent positions (staff, board, communications, filings); review how your organization looks from a regulator and public lens and focus on risk mitigation

Don’t Forget About All Those Non-Income Taxes

• sales and use taxes – sales taxes apply to retail sales (including through auctions) and are collected by the seller; use taxes apply to the use, consumption or storage of taxable items in a state where no sales tax was collected by the seller (possibly because the seller does not have a sufficient nexus with such state) – exemptions vary widely among states and may be based on the product sold or the intended use of the item (e.g., prescription drugs, “enterprise zone” exemptions) or on the organization’s purpose or activities (though it may not be tied to 501(c)(3) status)
• in most states, leases and rentals of tangible property (e.g., car, equipment) for use in the ordinary course of business are subject to sales tax
• most states do not apply sales tax to services (some do)
• property taxes – in many states, 501(c)(3) status is not sufficient to qualify for property tax exemption – see, e.g., Property Tax Welfare Exemption (California State Board of Equalization)
• real estate transfer taxes – some states and counties provide exemption from transfer taxes for property transferred by, and in some cases transferred to, a 501(c)(3) organization (in California, only counties and municipalities impose transfer taxes)
• payroll or similar taxes may be imposed by a state or municipality – issues such as treatment of remote workers must be analyzed
• key takeaway: even in the same state, the exemption requirements for a specific tax may be very different from the requirements for other taxes

Legal & Accounting Synergy: From Startup to Compliance

• may need both legal and accounting support regarding a startup and setting up for ongoing compliance (Form 1023 is a legal document, not just a tax document)
• good to figure out and really understand public charity classification and applicable public support tests (which may involve a math test that an accountant can help with) – see, e.g., Public Charity: Public Support Tests Part I: 509(a)(1); Public Charity: Public Support Tests Part II: 509(a)(2)
• consider required permits (and other filings) for doing business, DBAs, multi-state registrations, HR needs, insurance, privacy considerations
• emphasize governance and internal controls early, highlight common risks (e.g., commingling of funds, segregation of duties) and how early mitigation sets the tone for ongoing compliance – see, e.g., resources from BoardSource
• regularly review mission creep, program needs and disclosures, governing documents and policies, reporting requirements (e.g., Form 990, Form 8822-b for change in principal officer, state filings), audit requirements
• as organization matures, may want to review organizational structuring (including possible mergers or acquisitions, subsidiary structures, affiliates), board composition, governance structures, meeting performance, sophisticated gift solicitation and acquisition strategies and acceptance policies, IP issues, social media, alternative investments
• growth and decline options will demand consideration of additional legal and tax matters

Insurance for Tax-Exempt Organizations

• typical property and casual insurance program for a tax-exempt organization: property, liability (e.g., CGL, professional liability, defamation), umbrella (caution: doesn’t provide additional coverage over everything and probably doesn’t broaden the scope of existing coverages), workers compensation, management liability (e.g., D&O, employment practices liability), cyber/privacy liability, additional coverages based on need
• many insurance markets don’t “like” tax-exempt organizations other than 501(c)(3) organizations and may not understand those organizations’ risks
• D&O policy covers Claims and Inquiries (including Defense Costs) as a result of Wrongful Acts which means any error, misstatement, misleading statement, act, omission, neglect, or breach of duty actually or allegedly committed or attempted before or during the Policy Period by any Insured Person acting in their capacity as such – but be careful of state law limitations and for promises of indemnification in an organization’s governing documents that might not be covered by insurance
• D&O coverage is typically “claims made, meaning that coverage exists only for claims made during the time period the policy is in effect – need to know whether the insured has choice of counsel
• Be careful of shared coverage amounts where, for example, a policy covers D&O and EPLI (e.g., the EPLI coverage may limit what is available for DEI claims) – note that umbrella coverage may not sit above and cover D&O policies
• May be very relevant for some nonprofits to consider coverage for governmental actions – does the definition of a covered claim include investigations and subpoenas, what are the exclusions and limitations to such coverage (e.g., criminal acts)
• cyberliability risks include ransomware, business email compromises (far more common)
• cyberliability costs can be very high – consider forensic investigations, outside counsel, notification requirements, litigation or regulatory enforcement
• types of data subject to cyberliability laws may vary among jurisdictions – in the U.S., notice requirements are typically triggered by breaches involving sensitive data (e.g., SSN, financial, health, credentials), but also consider contractual obligations, third party risks (e.g., your vendor’s breach), and reputational damage
• see also resources from Nonprofit Insurance Alliance, CalNonprofits Insurance Services, Nonprofit Risk Management Center (e.g., Facing the Challenges of a Changing Insurance Marketplace)

Distress Relief for Nonprofits: What to Do to Avoid Financial Peril and What to Do When You’re In it

• Tennessee AG Jonathan Skrmetti recommended being proactive in reporting problems to the AG – transparency and good faith are preferable to responses after the AG receives complaints
• Executive Order 14332, Improving Oversight of Federal Grantmaking (August 7, 2025) – expect delays in grant processing and increased compliance requirements especially reflecting presidential priorities
• 2025 OMB Compliance Supplement – delayed, resulting in more compliance and reporting uncertainties (draft available here)
• financial resilience may need frequent scenario planning and rolling budgets
• key strategies/tips: assess risks, plan ahead, tell your story, collaborate, stay informed, remember to breathe / focus on what you can control
• strategies for mission preservation in financial distress: affiliation (e.g., shared services arrangements made available to distressed organization, governance take over, formation of a joint venture, asset transfer to strong organization), acquisition, merger

All in the Family: The Pros and Cons of Being “Related” to a Tax-exempt Organization: Part II

• Recap of Part I, which detailed some drawbacks and benefits of being “related”
• different levels and definitions related to control – e.g., Form 990 control is based on the right to remove/replace directors or representatives, supporting organization structures, and Section 318 attribution
• support services provided by an exempt organization to a related exempt organization for a fee not substantially below cost can be the basis for “derivative” exemption under the integral part theory and they will not generate unrelated business taxable income (UBTI) – “related” = parent-sub or subs with common parent – see also Rev. Rul. 58-194, Rev. Rul. 75-282
• supporting organization structures – see Supporting organizations: Requirements and types (IRS)
• group exemptions – Notice 2020-36 (including definitions of affiliation, general supervision, and control), but IRS placed a temporary moratorium on accepting new requests for group exemption letters as of June 17, 2020
• 512(b)(17) exception (insurance income and UBTI) and definition of affiliate