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New Guidance for Tax-Exempt Organizations: Proposed IRC 4960 Regulations

On June 11, 2020, the Internal Revenue Service released proposed regulations under code section 4960, which imposes an excise tax (21 percent for 2020) on remuneration in excess of $1,000,000 and any excess parachute payment paid by an applicable tax-exempt organization (ATEO) to any covered employee. These rules affect many tax-exempt organizations and, in certain circumstances, entities that are treated as related to those organizations. The policy objective behind the imposition of this excise tax is to level the playing field since parallel rules and taxes that apply to taxable entities have been in place for many years. Read more…