Compliance counts – IRS issues guidance for excise tax on executive compensation

Description

Abstract: The passage of the TCJA in late 2017 brought several unwelcome developments for nonprofits, including a new excise tax on certain executive compensation. To answer the many questions about the tax, the IRS has issued interim guidance that is largely unfavorable for organizations with highly paid executives or so-called “excess parachute payments.” This article walks the readers through the guidance in Notice 2019-09 in regard to making decisions about executive compensation, severance payments and settlements. A sidebar discusses who may be considered a “covered employee” for these purposes.