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.”