On April 9, 2025, the new administration issued an executive order initiating a comprehensive review of all IRS guidance and regulations. This review, conducted by the Department of Government Efficiency (DOGE), could fundamentally reshape the regulatory landscape for tax-exempt organizations. Here's what you need to understand about this executive order and how to prepare for potential changes.
What Is the IRS Guidance Review Executive Order?
The April 9, 2025 executive order launches a government-wide initiative to review all Internal Revenue Service guidance documents, revenue rulings, notices, and regulations.
The Stated Goals
The executive order articulates several objectives for the comprehensive review:
Identify and eliminate regulations that are outdated:
Regulations that no longer reflect current circumstances
Guidance that has been superseded by subsequent developments
Rules that are no longer necessary or effective
Provisions that impose unnecessary burden
Identify and eliminate regulations that are unlawful:
Regulations that exceed the IRS's statutory authority
Guidance that conflicts with the Internal Revenue Code
Rules that violate constitutional protections
Provisions that are arbitrary or capricious
Identify and eliminate regulations in conflict with recent Supreme Court decisions:
Guidance that conflicts with Supreme Court precedent
Rules that reflect overturned legal principles
Provisions that are inconsistent with current constitutional interpretation
Regulations that courts have questioned or criticized
Identify regulations issued by previous administrations now viewed as inappropriate:
Guidance reflecting policy priorities of prior administrations
Rules that conflict with current administration values
Provisions that expand government authority beyond what current administration supports
Regulations that impose burdens the current administration views as excessive
The Lead Agency: Department of Government Efficiency (DOGE)
The Department of Government Efficiency (DOGE) is conducting this comprehensive review:
DOGE's role:
Coordinate review across federal agencies
Identify priority targets for repeal
Develop criteria for evaluating regulations
Recommend specific regulatory actions
Working with the IRS:
DOGE works with IRS leadership to identify problematic guidance
IRS provides technical expertise on tax regulations
Joint determination of which guidance to repeal
Coordinated implementation of changes
Reporting to the White House:
DOGE reports findings to the Office of Information and Regulatory Affairs (OIRA)
White House oversight of regulatory review process
Political accountability for regulatory changes
Coordination with broader administration priorities
Scope of the Review
The review encompasses all IRS guidance affecting tax-exempt organizations:
Revenue rulings:
Official IRS interpretations of tax law
Binding on IRS and taxpayers
Provide guidance on specific fact patterns
Establish IRS positions on legal questions
Revenue procedures:
Procedural guidance for taxpayers
Instructions for compliance with tax requirements
Safe harbors and administrative procedures
Filing requirements and deadlines
Notices:
Interim guidance on new or emerging issues
Announcements of IRS positions
Requests for comments on proposed guidance
Transitional rules and relief
Private letter rulings and technical advice memoranda:
Guidance specific to individual taxpayers
Not binding on other taxpayers but indicative of IRS positions
Technical analysis of complex issues
Precedential value in some circumstances
Regulations:
Formal rules with force of law
Issued through notice-and-comment rulemaking
Binding on IRS and taxpayers
Subject to judicial review
The "Good Cause" Exception: Expedited Rulemaking
One of the most significant aspects of this executive order is its use of the "good cause" exception to bypass normal rulemaking procedures.
What Is the "Good Cause" Exception?
The Administrative Procedure Act (APA) normally requires federal agencies to follow "notice-and-comment rulemaking":
Standard rulemaking process:
Publishing proposed regulations in the Federal Register
Allowing the public to submit comments on proposed rules
Agencies responding to substantive comments and explaining their decisions
Providing a minimum comment period (typically 30-60 days)
Then finalizing regulations based on feedback and analysis
This process ensures public participation and transparency in regulatory development.
The "Good Cause" Exception Explained
Under the APA, agencies can bypass notice-and-comment rulemaking when "good cause" exists:
"Good cause" means:
Notice and comment would be "impracticable" — cannot be done as a practical matter
Notice and comment would be "unnecessary" — serves no useful purpose
Notice and comment would be "contrary to the public interest" — would harm the public
Requirements for using the exception:
Agency must provide a brief statement explaining why good cause exists
Explanation must be specific to the particular regulation
Courts review good cause determinations for abuse of discretion
Exception is meant to be used sparingly
How the Executive Order Uses This
The executive order authorizes agencies to use the "good cause" exception to expedite the repeal of regulations:
Authorization:
Agencies may use good cause exception for regulations identified in the review
Repeals can be implemented without notice-and-comment period
Agencies must provide brief statement of good cause
Expedited process allows rapid implementation
Rationale:
Regulations being repealed are unlawful or exceed authority
Public interest favors rapid repeal of problematic regulations
Notice and comment would delay removal of harmful rules
Stakeholders have already had opportunity to comment when regulations
were originally adopted
Practical Implication:
This means the IRS could repeal or modify regulations affecting tax-exempt organizations without the normal public comment period, allowing faster implementation of changes. Organizations may have little warning before guidance they've relied upon for years is suddenly eliminated.
Action Steps Required by the Executive Order
The executive order establishes specific timelines and requirements for agencies to follow in conducting the review.
Phase 1: Immediate Repeal (Expedited)
Agencies must immediately repeal any regulation that:
Clearly exceeds statutory authority granted to the agency:
Regulations that go beyond what Congress authorized in the Internal Revenue Code
Guidance that creates requirements not found in statute
Rules that expand IRS authority beyond congressional intent
Interpretations that conflict with plain statutory language
Is otherwise unlawful, including regulations in conflict with Supreme Court decisions:
Guidance that conflicts with recent Supreme Court precedent on religious freedom
Rules that conflict with First Amendment protections
Regulations that violate constitutional rights
Guidance that courts have criticized or questioned
Requirements for Phase 1:
Each repeal must be accompanied by a brief statement explaining why the "good cause" exception applies
Agencies should prioritize regulations in conflict with recent Supreme Court decisions
No notice-and-comment process required for these repeals
Agencies can implement repeals quickly and directly
Phase 2: Detailed Analysis (30 Days)
Within 30 days of the review period's conclusion, agencies must submit to the Office of Information and Regulatory Affairs (OIRA):
A comprehensive summary explaining why certain identified regulations were NOT targeted for repeal:
Analysis of regulations reviewed but retained
Justification for keeping specific guidance in place
Assessment of whether retained regulations comply with statutory authority
Explanation of why retained regulations serve important purposes
Analysis of whether those regulations comply with statutory authority and case law:
Legal analysis of each retained regulation
Review of relevant Supreme Court decisions
Assessment of constitutional compliance
Evaluation of whether regulations exceed IRS authority
Recommendations for any additional regulatory actions:
Suggestions for new guidance to replace repealed regulations
Proposals for regulatory reforms
Identification of areas needing clarification
Timeline for implementing recommended changes
Which IRS Regulations Are at Risk?
Based on the executive order's stated goals and the current political environment, certain types of IRS guidance are at particular risk of repeal.
Likely Targets for Repeal
1. DEI-Related Guidance
IRS guidance on diversity, equity, and inclusion initiatives in tax-exempt organizations:
Guidance on diversity initiatives as qualifying charitable purposes
Diversity in Board composition recommendations
DEI compliance guidance for nonprofits receiving federal grants
Guidance on diversity scholarships and programs
Rules about diversity-focused grantmaking
2. Environmental Justice and Climate Regulations
Guidance related to environmental and climate issues:
Guidance on "environmental justice" as qualifying charitable purpose
Climate-related tax-exempt organization guidance
Green energy organization qualification standards
Environmental advocacy organization rules
Climate change research and education guidance
3. Guidance Conflicting with Supreme Court Decisions
Any IRS guidance affected by recent Supreme Court cases:
Religious freedom and church autonomy — Guidance that may infringe on religious organizations' autonomy
Free speech rights — Rules that may restrict protected speech
Regulatory authority limits — Guidance that may exceed IRS statutory authority under recent administrative law decisions
Specific guidance that courts have said conflicts with constitutional rights
4. Obama and Biden Administration Guidance
Guidance issued during prior administrations now viewed as inappropriate:
Guidance issued during prior administrations expanding IRS authority
Rules imposing stricter standards than current administration prefers
Guidance on controversial social or political issues
Regulations reflecting previous administrations' policy priorities
5. Regulations on Political Activity Boundaries
Guidance distinguishing permissible issue advocacy from campaign activity:
Guidance on what constitutes prohibited campaign intervention
Rules about lobbying activity limits and measurement
Johnson Amendment implementation guidance (if Johnson Amendment is successfully challenged)
Guidance on voter education and registration activities
Rules about candidate forums and questionnaires
6. Gender Identity and LGBTQ+ Issues
Guidance related to gender identity and sexual orientation:
Rules about gender identity in tax-exempt organizations
Guidance on LGBTQ+ programs and services
Nondiscrimination requirements related to sexual orientation and gender identity
Guidance on bathroom and facility policies
Less Likely Targets
Guidance that will probably remain in place:
Core tax-exempt qualification standards:
Basic requirements for 501(c)(3), 501(c)(4), and other exemptions
Organizational and operational tests
Private benefit and inurement prohibitions
Foundational charitable purpose definitions
Unrelated business income tax (UBIT) regulations:
Basic UBIT rules and calculations
Exceptions and modifications
Reporting requirements
Debt-financed income rules
Charitable contribution deduction limitations:
Percentage limitations on deductions
Substantiation requirements
Qualified appraisal rules
Donor-advised fund regulations
Tax-exempt bond regulations:
Private activity bond rules
Arbitrage regulations
Qualified 501(c)(3) bond requirements
Compliance and remedial action guidance
Foundational governance and compliance standards:
Form 990 reporting requirements
Public disclosure rules
Recordkeeping requirements
Basic governance best practices
Timeline and Implementation
Understanding the likely timeline helps organizations prepare for changes.
Immediate (April 9 - Early May 2025)
DOGE begins comprehensive review:
Department of Government Efficiency starts reviewing all IRS guidance documents
Priority targets identified based on executive order criteria
Coordination with IRS leadership on implementation
Agencies identify priority targets for immediate repeal:
Focus on guidance clearly exceeding statutory authority
Prioritize regulations conflicting with Supreme Court decisions
Identify guidance from prior administrations to eliminate
IRS begins drafting statements accompanying immediate repeals:
Prepare "good cause" explanations for each repeal
Draft Federal Register notices
Coordinate with OIRA on implementation
Short-Term (May-June 2025)
First wave of regulatory repeals likely announced:
Federal Register notices published
Immediate effective dates for repeals
Initial guidance on transition periods (if any)
Organizations affected by repeals face immediate uncertainty:
Compliance questions about what rules now apply
Uncertainty about permissible activities
Questions about whether new guidance will replace repealed rules
New guidance may be issued to replace repealed guidance:
Some repealed guidance may be replaced with new rules
Other areas may be left without clear guidance
Organizations may need to operate with increased uncertainty
Medium-Term (June-July 2025)
30-day analysis period concludes:
Agencies complete comprehensive summaries
Analysis of retained regulations submitted to OIRA
Recommendations for additional actions developed
Agencies submit summaries to OIRA:
Detailed reports on review findings
Justifications for retained regulations
Proposals for future regulatory actions
Additional regulatory actions may be proposed:
Second wave of repeals identified
New guidance proposed to fill gaps
Regulatory reforms recommended
Long-Term (July 2025 - End of Year)
Second wave of regulatory changes implemented:
Additional repeals based on comprehensive review
New guidance issued to replace repealed regulations
Regulatory reforms implemented
Organizations adapt to new regulatory landscape:
Update compliance policies and procedures
Train staff on new requirements
Adjust operations to reflect changed guidance
Courts may challenge some repeals and new guidance:
Legal challenges to use of "good cause" exception
Challenges to specific repeals or new guidance
Preliminary injunctions possible in some cases
New guidance emerges to fill gaps:
IRS issues new revenue rulings and procedures
Transitional guidance provided
FAQs and other informal guidance published
Potential Impacts on Tax-Exempt Organizations
The comprehensive review will have both positive and negative impacts on different organizations.
Potential Positive Impacts
Removal of regulatory burdens viewed as excessive:
Elimination of guidance imposing unnecessary compliance costs
Reduction in reporting and documentation requirements
Streamlined processes for certain activities
Greater flexibility in program design and implementation
Clarity on permissible political and issue advocacy:
Clearer boundaries between permissible and prohibited activity
Potentially expanded ability to engage in issue advocacy
Reduced uncertainty about political activity rules
More guidance on lobbying limitations
Increased flexibility for religious organizations:
Greater autonomy in religious matters
Reduced government interference in religious activities
Expanded ability to maintain religious standards
Protection of religious freedom rights
Potential expansion of permissible organizational activities:
Broader interpretation of charitable purposes
More flexibility in program design
Reduced restrictions on certain activities
Greater organizational autonomy
Potential Negative Impacts
Loss of IRS guidance that organizations have relied upon:
Uncertainty about compliance requirements
Loss of safe harbors and clear standards
Need to develop new compliance approaches
Increased risk of inadvertent violations
Uncertainty about permissible activities:
Lack of clear guidance on what's allowed
Difficulty planning programs and activities
Increased need for legal advice
Greater compliance risk
Potential compliance gaps:
Areas where no clear guidance exists
Uncertainty about IRS enforcement approach
Difficulty determining compliance obligations
Increased audit risk
Possibility of audit exposure:
IRS enforcement standards may change
Organizations may face audits based on new interpretations
Penalties possible for activities previously considered permissible
Need for careful documentation of compliance efforts
Significant Uncertainty
Organizations won't know which guidance has been repealed:
Changes may occur without advance notice
Multiple guidance documents may be affected simultaneously
Difficult to track all changes
Need for ongoing monitoring
Courts may block some repeals:
Legal challenges may succeed in some cases
Preliminary injunctions may halt implementation
Conflicting court decisions possible
Ultimate outcomes uncertain
The IRS may not immediately clarify new standards:
Gaps may exist between repeal and replacement guidance
Transitional periods may be unclear
Enforcement approach may be uncertain
Organizations may need to make judgment calls
What Organizations Should Do Now
Tax-exempt organizations should take proactive steps to prepare for potential changes.
Immediate Actions (This Month)
1. Audit Your Reliance on IRS Guidance
Conduct a comprehensive inventory:
List all IRS guidance documents your organization relies on for compliance decisions
Identify which guidance areas might be targeted (DEI, political activity, environmental issues, etc.)
Assess how changes would impact your operations
Document your current understanding of compliance requirements
Identify areas of greatest vulnerability
2. Review Your Compliance Policies
Examine organizational policies:
Review all compliance policies to identify dependence on specific IRS guidance
Document which policies are based on which guidance documents
Flag areas of uncertainty if guidance is repealed
Identify policies that may need revision
Prepare for potential policy updates
3. Board and Leadership Communication
Educate key stakeholders:
Brief board and senior leadership about the executive order and potential impacts
Discuss organizational mission and values in context of potential regulatory changes
Begin contingency planning for different scenarios
Obtain board guidance on organizational priorities
Establish process for ongoing updates
4. Identify Your Risk Areas
Assess organizational exposure:
Determine which of your programs or activities rely on guidance at risk
Evaluate financial impact of potential changes
Assess reputational risks
Identify stakeholder concerns
Prioritize areas needing attention
5. Establish Monitoring Systems
Create processes to stay informed:
Assign staff responsibility for monitoring developments
Subscribe to IRS announcements and updates
Join professional associations providing guidance
Establish regular review schedule
Create communication protocols
Short-Term Actions (Next 2-3 Months)
1. Monitor DOGE and IRS Announcements
Stay informed about developments:
Subscribe to IRS announcements and Federal Register notices
Follow nonprofit professional association guidance on regulatory changes
Track news coverage of specific regulatory repeals
Join industry coalitions monitoring the review process
Participate in webinars and briefings
2. Legal Review and Update
Consult with professional advisors:
Engage tax counsel about implications of likely guidance changes
Develop contingency compliance policies for different scenarios
Review contracts and agreements that reference IRS guidance
Update board policies and governance documents
Prepare for potential legal challenges
3. Stakeholder Communication
Prepare messaging:
Develop communication plans for donors, members, and communities
Create messaging about your organization's values and mission
Proactively address concerns from stakeholders
Prepare FAQs about potential changes
Maintain transparency about organizational response
4. Financial Planning
Assess financial implications:
Evaluate potential costs of compliance changes
Budget for legal and consulting fees
Assess impact on fundraising and revenue
Plan for potential program modifications
Build reserves for transition costs
5. Staff Training
Prepare your team:
Educating staff about potential changes
Train on monitoring and compliance processes
Develop protocols for responding to changes
Create decision-making frameworks
Build organizational capacity for adaptation
Long-Term Actions (Next 6-12 Months)
1. Adapt to New Guidance
Implement changes as needed:
Update compliance policies based on repealed or changed guidance
Train staff on new compliance standards
Modify reporting or disclosure practices as needed
Document your organization's understanding of new requirements
Implement new procedures and controls
2. Build Regulatory Flexibility
Create adaptive capacity:
Develop ability to adapt quickly to regulatory changes
Create compliance cultures that can accommodate evolving standards
Build relationships with advisors who can provide timely guidance
Establish processes for rapid policy updates
Monitor ongoing changes through professional networks
3. Engage in Advocacy (If Desired)
Participate in policy discussions:
Consider joining nonprofit advocacy efforts related to specific regulatory changes
Provide feedback to professional associations monitoring changes
Participate in comment periods for new guidance, if offered
Share your organization's experience with policymakers
Contribute to collective sector response
4. Document Compliance Efforts
Maintain thorough records:
Document your organization's compliance analysis and decisions
Maintain records of guidance relied upon
Keep evidence of good faith compliance efforts
Prepare for potential audits
Create audit trails for key decisions
5. Strategic Planning
Incorporate regulatory changes into planning:
Update strategic plans to reflect new regulatory environment
Assess mission and program alignment
Consider organizational restructuring if needed
Evaluate partnership and collaboration opportunities
Plan for long-term sustainability
Key Takeaways
The April 9, 2025, executive order initiates comprehensive review of all IRS guidance affecting tax-exempt organizations, with the Department of Government Efficiency (DOGE) conducting the review
The "good cause" exception allows expedited rulemaking — agencies can bypass traditional notice-and-comment procedures, meaning the IRS could repeal or modify regulations without public comment periods
Regulations conflicting with Supreme Court decisions are priority targets — guidance on religious freedom, free speech, and regulatory authority limits face highest risk of repeal
DEI guidance, climate/environmental justice guidance, and politically-sensitive guidance are at particular risk — organizations relying on this guidance should prepare for potential changes
Significant changes likely in coming months — first wave of repeals expected May-June 2025, with additional changes throughout the year
Organizations should immediately audit their reliance on IRS guidance — identify which guidance documents you depend on and assess vulnerability to changes
Monitor announcements closely and stay informed — subscribe to IRS updates, follow professional associations, and maintain relationships with legal counsel
Expect uncertainty until specific changes are announced — the scope and timing of changes remain unclear, requiring organizations to prepare for multiple scenarios
Conclusion
The comprehensive IRS guidance review represents a significant potential shift in the regulatory landscape for tax-exempt organizations. While some changes may benefit nonprofits by removing burdensome guidance, others may create uncertainty or operational challenges.
The key to navigating this period successfully is staying informed, preparing for multiple scenarios, and maintaining strong legal and compliance counsel. Organizations should:
Be proactive, not reactive — anticipate changes and prepare in advance
Stay connected — maintain relationships with professional associations and advisors
Document everything — keep thorough records of compliance efforts and decisions
Communicate transparently — keep stakeholders informed about changes and organizational response
Remain mission-focused — ensure regulatory compliance supports rather than distracts from mission
As the review process unfolds over the coming months, organizations that have prepared thoughtfully will be best positioned to adapt successfully to the new regulatory environment while maintaining their mission focus and stakeholder trust.
Stay informed. Stay prepared. Stay mission-focused.
For More Information:
IRS.gov announcements and guidance page
Department of Government Efficiency (DOGE) announcements
Nonprofit professional associations
