If the Treasury’s Section 25F regulations land as an interim final rule this September — which its own Unified Agenda filing suggests is the plan — scholarship granting organizations will be expected to comply from the day the rule publishes in the Federal Register. There is no grace period in the timetable. That means the operational work can’t wait for the official notice. Here’s what to have in place before it arrives.
Open a segregated account
Any SGO planning to receive federal-credit-eligible contributions needs a bank account that holds nothing else — not your existing state-program scholarship account, not your general operating account. A new account, designated specifically for Section 25F qualified contributions, is expected to be the safe harbor for the rule’s 90-percent spending test. If you operate in more than one state, plan on one segregated account per state.
Build an income-verification process now
The eligibility test for students is 300% of area median gross income under 26 U.S.C. §25F(c)(2)(A). Official AMGI threshold tables for Section 25F have not been published yet, but the verification paths the Treasury has previewed are clear enough to build on: paystubs, tax returns, W-2s, or verification through a crediting agency as the primary path, with categorical eligibility (participation in SNAP, Medicaid, free-lunch programs, or similar needs-based programs with income limits at or below the threshold) as a backup. Foster children qualify automatically and don’t need separate income documentation.
Build an intake process to collect this now, even without the final threshold numbers. You can plug the official AMGI table in once it’s published rather than designing your intake form from scratch under deadline pressure.
Prepare your donor acknowledgment system
Donors will not give SGOs their social security numbers. Instead, each SGO will need to generate a unique donor number under an IRS-provided method, include it on the donor’s written acknowledgment, and report it to the IRS for matching. The IRS has said it will provide a portal to support this, but has also said “the precise functionality and timing may develop in phases rather than all being available on day one.” Don’t assume the portal will be ready the moment the rule is posted.
What you can build now: the acknowledgment process itself. Timely, written confirmation of a donor’s total annual contributions is good practice regardless, and having that workflow solid means you only need to slot the donor-number field in once the numbering method is published, rather than building the whole acknowledgment system under time pressure.
Budget and plan for an annual audit
Every SGO on a state list will need an annual financial and programmatic audit from a qualified independent third party, provided to every state where it’s listed. Smaller SGOs may qualify for a streamlined internal-committee audit instead, with that version signed under penalties of perjury (the threshold for “smaller” hasn’t been defined yet). Two things to do now regardless of size: start identifying and vetting an independent auditor, and if you believe you’ll qualify for the streamlined option, start documenting why, so you’re not making that case for the first time when time is of the essence.
The throughline
None of this requires waiting for the Federal Register. The account structure, the intake process, the acknowledgment workflow, and the audit relationship are all things an SGO can build today, using what the Treasury has already previewed. Then, adjust once the published rule provides the lingering specifics (AMGI tables, the donor-number method, the “smaller SGO” threshold). SGOs that wait for the final rule to start building will be doing all of this under a compliance deadline instead of being ahead of the curve.
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