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Home » IRS Issues Proposed Regulations on Excess Nonprofit Executive Compensation

IRS Issues Proposed Regulations on Excess Nonprofit Executive Compensation

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By Harry J. Friedman & Claire Arritola on June 25, 2020
Posted in Income Tax, International Tax, IRS, Labor & Employment, Tax Cuts and Jobs Act, Tax Planning, tax-exempt organizations, Taxpayers

On June 5, 2020, the IRS issued proposed Treasury Regulations under section 4960 of the Internal Revenue Code of 1986, as amended (the Code).

Background

Section 4960 was added to the Code in 2017 as part of the Tax Cuts and Jobs Act. Section 4960 generally provides that if certain tax-exempt organizations (an “applicable tax-exempt organization” or “ATEO”) pay remuneration to certain employees (“covered employees”) in excess of $1,000,000 or an excess parachute payment, the payments are subject to an excise tax on the excess remuneration and excess parachute payments at the corporate income tax rate, currently 21%.

Read the full GT Alert, “IRS Issues Proposed Regulations on Excess Nonprofit Executive Compensation.”

Tags: ATEO, employees, greenberg traurig, GT Insight, gt law, Income Tax, IRS, labor & employment, nonprofit, tax cut and jobs tax act, tax exempt organizations, U.S. Treasury
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Photo of Harry J. Friedman Harry J. Friedman

Harry J. Friedman has a wide-ranging experience in the area of general business tax planning, including the formation of joint ventures, limited partnerships and limited liability companies, consolidated tax returns, and mergers and acquisitions of both private and public corporations. In addition, Harry…

Harry J. Friedman has a wide-ranging experience in the area of general business tax planning, including the formation of joint ventures, limited partnerships and limited liability companies, consolidated tax returns, and mergers and acquisitions of both private and public corporations. In addition, Harry provides advice and counseling to tax exempt organizations including hospitals, private schools, and scientific research organizations on maintaining tax-exempt status, unrelated trade or business income issues, and joint ventures as well as corporate governance issues.

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Photo of Claire Arritola Claire Arritola

Claire Arritola focuses her practice on U.S. federal income tax matters, with a focus on corporate and partnership transactions. She assists private equity funds, private and public companies, REITs, individuals and tax-exempt organizations. Claire also provides advice and assistance to organizations seeking to…

Claire Arritola focuses her practice on U.S. federal income tax matters, with a focus on corporate and partnership transactions. She assists private equity funds, private and public companies, REITs, individuals and tax-exempt organizations. Claire also provides advice and assistance to organizations seeking to obtain or maintain their tax exempt status on the IRS application process, corporate governance issues, unrelated trade or business income issues, and joint ventures.

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