# Prop. Treas. Reg. § 1.25F-4: Reporting and recordkeeping requirements for SGOs. Proposed regulation, not in force. REG-117199-25, 91 FR 62818, published 2026-10-02 . Interprets 26 U.S.C. § 25F. Par. 2. Sections 1.25F-0 through 1.25F-5 are added to read as follows: (a) Overview. This section provides reporting and recordkeeping requirements for organizations relating to the credit determined under section 25F of the Internal Revenue Code (Code). Paragraph (b) of this section provides that each organization that receives an amount designated as a qualified contribution must complete a mandatory registration process through the IRS SGO portal. Paragraph (c) of this section provides the requirements for an organization's acknowledgement, recordkeeping and reporting for the receipt of amounts designated as qualified contributions. Paragraph (d) of this section details annual reporting requirements for organizations included on a State SGO list for any part of a calendar year within the organization's taxable year. Paragraph (e) of this section describes the annual financial and programmatic audit requirement. (b) Mandatory registration through IRS SGO portal —(1) In general. Except to the extent otherwise provided in guidance, an organization that plans to solicit qualified contributions must electronically register through the IRS scholarship granting organization (SGO) portal in accordance with the instructions provided therein. Registration through the IRS SGO portal will allow the organization to obtain instructions for creating a unique donor number in the uniform format to be used by all SGOs, authorize disclosure of its name and identifying information on the IRS SGO list, and report qualified contribution information. An organization must authorize disclosure in accordance with section 6103(c) of its name and identifying information on the IRS SGO list for a calendar year if the organization wants the IRS to publish such information on the IRS SGO list for that year. (2) Time for registration through IRS SGO portal. An organization must register with the IRS as soon as possible and preferably before the organization appears on any State SGO list. Until the organization has registered in the IRS SGO portal, the organization will not be able to comply with the acknowledgement and reporting requirements in paragraph (c) of this section, which is a necessary part of substantiating that a donor's qualified contribution is eligible for the credit allowed under section 25F. (3) Information required to complete registration. An organization must provide the following information to the IRS to register in the IRS SGO portal: (i) The organization's name, IRS employer identification number (EIN), address, telephone number, and year of formation; (ii) The name of a person whom the IRS may contact if there is an issue with the registration, and who either possesses legal authority to bind the organization or provides a properly executed power of attorney on Form 2848, Power of Attorney and Declaration of Representative; (iii) The organization's taxable year; and (iv) Any other information the IRS deems necessary for purposes of administering the requirements of section 25F as provided in guidance. (4) Donor number. The IRS will review the registration submission to verify that all the required information has been submitted and will provide the organization with instructions for creating a unique donor number for each donor who has designated at least one payment to the organization as a qualified contribution to the SGO during the calendar year. (c) Acknowledgement and reporting of qualified contributions received by SGOs— (1) Reporting to donor— (i) In general. An organization must provide a timely written acknowledgement to each donor that includes the following information: (A) The organization's EIN; (B) The total amount of contributions made by the donor to the organization during the calendar year that the donor designated as qualified contributions; (C) The unique donor number the organization created for the donor in accordance with paragraph (b)(4) of this section; (D) A statement as to whether or not the organization provided any goods or services in consideration, in whole or in part, for any qualified contributions made by the donor to the SGO during the calendar year; and (E) A description and good faith estimate of the value of any goods or services described in paragraph (c)(1)(i)(D) of this section, if any. (ii) Time and manner of providing timely written acknowledgement. An organization must provide the timely written acknowledgement no later than January 31 of the calendar year following the calendar year in which a donor made a qualified contribution to the organization. The timely written acknowledgement can be provided in writing or in any other form acceptable to the donor, including by electronic delivery if the donor consents to receive the statement electronically and does not withdraw the consent before the statement is furnished. (2) Reporting qualified contributions to the IRS— (i) In general. An organization must annually report to the IRS the following information with respect to each unique donor number assigned by the organization as set forth in paragraph (b)(4) of this section: (A) The donor's name; (B) The donor's address; (C) The aggregate amount of qualified contributions made by the donor to the organization during the calendar year; and (D) Any other information the IRS deems necessary for purposes of administering the requirements of section 25F as may be described in future guidance. (ii) Time and manner of reporting. An organization must report the information described in paragraph (c)(2)(i) of this section no later than February 28 of the year following the year in which such qualified contributions were made. Unless otherwise provided in guidance, the reporting must be done through the IRS SGO portal in accordance with the instructions provided therein. (d) Reporting operational information to the IRS —(1) In general. An organization that has been included on a State SGO list for any part of a calendar year within its taxable year must annually provide a certification and certain information to the IRS. Paragraph (d)(2) of this section provides rules relating to the annual certification. Paragraph (d)(3) of this section provides rules relating to information that must be reported. Paragraph (d)(4) of this section provides the time and manner of reporting. (2) Annual certification —(i) In general. An organization that was an SGO for any part of a calendar year within its taxable year must certify that, with respect to its taxable year (or the period during which it was an SGO, if not the entire year), such organization: (A) Was described in section 501(c)(3), exempt from tax pursuant to section 501(a), and not a private foundation, as defined in section 509(a); (B) Prevented the co-mingling of qualified contributions with other amounts by maintaining a section 25F segregated account, which must contain only qualified contributions and the earnings therefrom, for each covered State on whose State SGO list the SGO appears, deposited all qualified contributions into that section 25F segregated account, and maintained a complete set of books and records for that section 25F segregated account; (C) Satisfied the operational requirements of section 25F(d)(1) and § 1.25F-3(c); (D) Did not award a scholarship to any disqualified person, as tested at the organizational level and as tested at the section 25F segregated account level solely for that section 25F segregated account by each single-State SGO using the safe harbor in § 1.25F-3(c)(2) and by each multistate SGO; (E) Was located in each State on whose State SGO list the organization was listed; (F) Provided each donor a timely written acknowledgement; and (G) Commissioned a financial and programmatic audit described in paragraph (e) of this section by a qualified independent third party and provided the audit report to each covered State on whose State SGO list the organization was listed. (ii) Additional certifications relating to operational requirements—(A) Single-State SGO. A single-State SGO must certify that it— ( 1 ) Provided scholarships to 10 or more students, not all of whom attended the same school; ( 2 ) Spent not less than 90 percent of the income of the organization on scholarships for eligible students; ( 3 ) Verified that scholarships were used solely for qualified elementary or secondary education expenses; ( 4 ) Verified that scholarships were awarded only to eligible students who were members of an eligible household and who were eligible to enroll at a public elementary or secondary school; ( 5 ) Verified that the recipient eligible students were solely within the State; ( 6 ) Awarded scholarships with a priority (as provided in § 1.25F-3(c)(8)) for eligible students awarded a scholarship for the previous school year and, thereafter, for any eligible students who have a sibling who was awarded a scholarship from such SGO; ( 7 ) Did not earmark or set aside contributions for scholarships on behalf of any particular student; and ( 8 ) If the organization used the safe harbor found in § 1.25F-3(c)(6)(iii)(C) for providing individual scholarships for individual academic tutoring or special needs services at schools in low-income areas, that it obtained a third-party audit and provided the audit report to the covered State in accordance with § 1.25F-3(c)(6)(iii)(C)( 2 ). (B) Single-State SGO using the safe harbor found in § 1.25F-3(c)(2). If a single-State SGO used the safe harbor found in § 1.25F-3(c)(2), then it must certify that— ( 1 ) At least 85 percent of the organization's activities during the taxable year were scholarship granting activities and ( 2 ) Each of the elements of paragraph (d)(2)(ii)(A) was met with respect to the organization's section 25F segregated account. (C) Multistate SGO. If an organization was a multistate SGO for any part of a calendar year within its taxable year, then it must certify that, with respect to its taxable year (or the period during which it was an SGO, if not the entire taxable year): ( 1 ) At least 85 percent of the organization's activities during the taxable year were scholarship granting activities, and ( 2 ) Each of the elements of paragraph (d)(2)(ii)(A) of this section was met separately with respect to the organization's section 25F segregated account for each covered State on whose State SGO list the SGO appeared. (3) Required annual information —(i) In general. An organization that was a single-State SGO for any part of a calendar year within its taxable year must report, with respect to its taxable year (or the period during which it was an SGO, if not the entire taxable year), the following information: (A) The number of students that applied for a scholarship; (B) The number of students selected for a scholarship in accordance with the safe harbor in § 1.25F-3(c)(6)(iii)(C); (C) The number of scholarships awarded; (D) The highest, lowest, and average amount of the scholarships awarded; (E) The number of schools at which the scholarship recipients were enrolled; (F) Aggregate data on each category of qualified elementary and secondary education expenses for which scholarship funds were used; (G) The amount of the organization's income; (H) With regard to the amounts spent on scholarships for eligible students solely within the State during the taxable year: ( 1 ) The total amount spent during the year; and ( 2 ) Of the total amount spent during the year, the amount counted as satisfying the 90 percent of income spending requirement for the prior year, and the amount counted as satisfying that requirement for the current year; (I) The percentage of the prior year's income spent on scholarships for eligible students solely within the State, taking into account the amounts spent in both the prior and current years; (J) The percentage of the current year's income spent on scholarships for eligible students solely within the State; and (K) Any other information required in accordance with guidance. (ii) Single-State SGO using the safe harbor found in § 1.25F-3(c)(2). A single-State SGO using the safe harbor found in § 1.25F-3(c)(2) must report the information described in paragraph (d)(3)(i) of this section with respect to its section 25F segregated account, rather than with respect to the organization as a whole. (iii) Multistate SGO. An organization that was a multistate SGO for any part of a calendar year within its taxable year must provide the information described in paragraph (d)(3)(i) of this section separately with regard to its section 25F segregated account for each covered State on whose State SGO list the organization appears. (4) Time and manner of reporting. Except to the extent otherwise provided in guidance, the certification and information required by paragraphs (d)(2) and (3) of this section must be provided at such time and in such manner as the IRS may prescribe by publication, form, or instructions. For organizations required to file an annual information return under section 6033(a), the required form must be included as an attachment. An organization that is not required to file an annual information return under section 6033(a) must provide this form separately to the IRS on or before the 15th day of the 5th calendar month following the close of the period for which the form reports the required certifications and information. Organizations must concurrently provide a copy of the form to each State on whose State SGO list the organization appears in accordance with guidance. (e) Required audits —(1) In general. Each organization that was an SGO during any part of the preceding taxable year must undergo an annual financial and programmatic audit by a qualified independent third party and provide the audit results to each covered State on whose State SGO list the SGO appeared (or, if a multistate SGO, to each covered State on whose State SGO list the SGO appeared). (2) Qualified independent third party —(i) Organizations with annual receipts exceeding $500,000. An organization whose total receipts (whether or not required to be deposited into its section 25F segregated account) for the most recent taxable year were more than $500,000 must hire an external, independent professional or accredited body that regularly assesses an organization's compliance, financial records, or processes (including internal controls) against specific standards to perform the audit required by this paragraph (e). (ii) Organizations with annual receipts of $500,000 or less. An organization whose total receipts for the taxable year did not exceed $500,000 may use a committee of independent persons unrelated to the organization's management to conduct the audit required by this paragraph (e). The report must be signed under penalties of perjury by the persons preparing such report. (3) Content of audit. The audit required by this paragraph (e) must cover, at a minimum: (i) The organization's procedures for soliciting scholarship applications or otherwise identifying possible scholarship recipients from eligible students in the State, for verifying each such student's eligibility, and for processing scholarship applications; (ii) The organization's procedures for selecting scholarship recipients, including procedures to establish priority for students previously awarded a scholarship and then any eligible students who have a sibling who was awarded a scholarship from such organization, and procedures to prevent the award of a scholarship to a disqualified person as defined in § 1.25F-3(d); (iii) The organization's procedures for determining the amount of the scholarship awarded to each recipient; (iv) The method(s) the organization uses to track how scholarship money for qualified elementary and secondary education expenses is paid (whether by direct payment, through a qualified digital wallet, or by reimbursement); (v) Verification that scholarship expenses were qualified elementary and secondary education expenses; (vi) Verification that the organization is located within the State; and (vii) Verification that the organization met all of the operational requirements in § 1.25F-3(c). (4) Scope of audit. The audit required by this paragraph (e) must assess compliance with the elements listed in paragraph (e)(3) of this section generally consistent with the scope of the reporting requirements applicable to the SGO. Thus, the audit regarding items described in paragraphs (e)(3)(i) through (vi) of this section should be done at the section 25F segregated account level, but the audit regarding the items described in paragraph (e)(3)(vii) of this section should be done consistent with the operational requirements set forth in § 1.25F-3(c)(1), (2), or (3), as applicable to the SGO. (f) Applicability date. This section applies to taxable years ending on or after [date of publication of the final regulations in the Federal Register ].