AICPA seeks IRS guidance on new excise tax for nonprofits

Nonprofit tax teams are being asked to plan around a new excise tax before the IRS has fully spelled out how it works, a gap that can force KPMG professionals and their clients into defensive assumptions, delayed decisions, and uneven treatment across organizations.

The American Institute of CPAs asked the Internal Revenue Service for more guidance on a provision of the One Big Beautiful Bill Act that imposes an excise tax on tax-exempt organizations. The law was signed on July 4, 2025 as Public Law 119-21, but the operational questions still matter now: which nonprofits are in scope, when the tax starts to bite, how it will be reported, and what counts as the right approach while the rules remain unfinished.

That uncertainty lands hardest on universities, hospitals, foundations, charities and other nonprofits that often run lean finance shops and cannot afford to guess wrong. For KPMG tax professionals, the issue is not abstract policy; it is client work that can quickly spill into controversy, compliance and advisory. Teams have to assess exposure, decide whether estimates or filings should change, brief boards and controllers, and determine whether compensation, investment or related-party structures need a fresh look before anyone has clear guidance from Washington, D.C.

The IRS has already set up a dedicated One, Big, Beautiful Bill Provisions page and FAQ hub, including a section on tax-exempt entities and charitable giving. The agency’s own news page shows it has been issuing guidance on other parts of the law too, including remittance transfer excise tax relief. That suggests more administrative updates are coming, but it also underscores how much work remains before tax professionals can move from interpretation to implementation.

KPMG has been tracking the tax-exempt provisions since the bill was still moving through Congress. The firm said the U.S. House of Representatives passed the original version on May 22, 2025 by a 215-214 vote, then passed the Senate version on July 3, 2025 before President Trump signed it into law the next day. KPMG’s July 2025 analysis of the enacted law flagged expanded tax on exempt-organization excess compensation among the tax subtitle’s changes.

For KPMG employees serving the nonprofit sector, the practical risk is simple: without clear IRS instructions, different clients may reach different conclusions on the same facts. That creates more review work, more follow-up with audit and tax leaders, and more pressure to document assumptions before year-end planning hardens into policy.