Many Changes Afoot for Nonprofit Organizations at Internal Revenue Service

End-of-PGP-window update for advocacy, charter-school, and independent-school clients running paired (c)(3)/(c)(4) structures.

As the Treasury-IRS 2025-2026 Priority Guidance Plan (“PGP”) moves into its final weeks, the exempt-organization landscape is shifting on three fronts at once. One change is already in effect; two more sit on the regulators’ desks with a June 30 deadline. All three touch Commonlight Legal’s advocacy, charter-school, and independent-school practice, with paired (c)(3)/(c)(4) structures most exposed.

What Already Changed: Form 8976 Moves to Pay.gov

Beginning March 9, 2026, the IRS retired the Electronic Notice Registration System (ENRS) and moved Form 8976, Notice of Intent to Operate Under Section 501(c)(4), to Pay.gov. Social welfare organizations submitting their initial 60-day notification must now use the Pay.gov portal exclusively. The $50 user fee is paid in the same transaction by bank account, credit card, or debit card. No paper form is available.

For organizations that previously filed through the ENRS, copies of past Form 8976 filings are available only by direct request to the IRS. If a client formed a (c)(4) sidecar between 2016 and early 2026 and does not have a clean copy of the 8976 confirmation in its corporate record book, request a duplicate sooner rather than later.

The substantive filing requirement has not changed: new (c)(4) entities still must file within 60 days of formation. Only the mechanics changed, and the absence of any paper fallback means filing officers should set up Pay.gov accounts before they are needed.

Watch Item 1: Public Policy Doctrine Guidance

One of the projects on the exempt-organization portion of the annual PGP commits Treasury and the IRS to issue “guidance on the application of the fundamental public policy against racial discrimination, including consideration of recent caselaw, in determining the eligibility of private schools for recognition of tax-exempt status under § 501(c)(3).”

Translation? The Service intends to re-examine Bob Jones University v. United States in light of Students for Fair Admissions v. Harvard and the Eleventh Circuit’s Fearless Fund decision.

The downstream questions for independent-school and charter-network clients are significant. If the IRS issues guidance equating race-conscious scholarship programs or grant criteria with the kind of “established public policy” violation that disqualified Bob JonesUniversity when it discriminated against students on racial grounds and refused their admission, then exempt status for programs serving historically excluded students could be drawn into question. Race-exclusive grants made by (c)(3) foundations, already exposed under Section 1981 after Fearless Fund, would face a second challenging front. Clients with race-conscious policies, mission language referencing equity, or grant programs targeting specific demographic groups may wish to revisit those documents if and when guidance drops by June 30.

Watch Item 2: Johnson Amendment Guidance

On July 7, 2025, the IRS filed a proposed consent judgment in National Religious Broadcasters v. Werfel (E.D. Tex.), conceding that the Johnson Amendment, “as properly interpreted,” does not bar houses of worship from speaking to their congregations through “customary channels of communication” about electoral politics viewed through a religious lens. On March 31, 2026, the court dismissed the case for lack of jurisdiction, leaving the proposed consent decree without legal effect.

That dismissal does not retract the IRS’s stated litigation position; it simply means that any formalization of the “customary channels” carve-out now has to travel through guidance rather than through a court order. The PGP does not yet list a Johnson Amendment project by name, but the topic is plainly live, and any revenue ruling or notice issued before June 30 will reshape (c)(4) restructuring conversations for faith-affiliated advocacy clients who have been weighing whether to move political speech out of the (c)(3) entirely.

Core Takeaways

Three items belong on the desk this quarter. First, audit any (c)(4) entity formed since 2016 to confirm the Form 8976 confirmation is in the record book; if it is missing, request a duplicate from the IRS now. Second, for independent-school and grant-making clients, inventory race-conscious program language and have a redrafting plan in reserve. Third, for faith-affiliated advocacy clients with paired (c)(3)/(c)(4) structures, hold any restructuring decision until the PGP window closes on June 30. We will circulate a follow-up Beacon once guidance issues, or once the PGP window expires without it.

This article is for general informational purposes only and does not constitute legal advice. Reading this article does not create an attorney-client relationship. For advice specific to your organization's situation, contact Commonlight Legal LLP.

Lauren Koster is the Managing Partner at Commonlight Legal LLP, a boutique law firm serving nonprofits in New York, District of Columbia, Connecticut, and Massachusetts. She advises executive directors and boards on nonprofit formation, governance, and compliance and serves as outside general counsel for nonprofits.

Before founding Commonlight, Lauren clerked in the U.S. District Court of New Hampshire and the Massachusetts Supreme Judicial Court. She also represented children in Massachusetts child abuse and truancy cases as one of twenty-eight Skadden Fellows conducting public interest legal projects around the country. Prior to becoming a lawyer, Lauren was a public school teacher and policy advocate in Connecticut. She is admitted to practice in New York, Connecticut, and Massachusetts.