Proposed regulations, excise tax on tax-exempt organization compensation; OIRA review completed

Excise tax on tax-exempt organization compensation

OMB’s Office of Information and Regulatory Affairs (OIRA) reported it has completed review of proposed regulations concerning an excise tax imposed under section 4960 on the amount of remuneration in excess of $1 million and on any excess parachute payment paid by an applicable tax-exempt organization to a covered employee.


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The 2017 tax law (Pub. L. No. 115-97)—the law that is often referred to as the “Tax Cuts and Jobs Act” (TCJA)—added new section 4960 to the Code to provide that excess remuneration and excess parachute payments paid by an applicable tax-exempt organization to a covered employee are subject to the excise tax.

According to OIRA, review of the proposed regulations was completed on April 30, 2020.

  • RIN: 1545-BO99Section 4960 excise tax on tax-exempt organization compensation [TCJA]

The proposed regulations are briefly described by OIRA as follows:

These regulations implement the new IRC section 4960. They are necessary to provide clarity to taxpayers regarding the meaning of certain terms in the statute and to prevent abusive means of avoiding the tax.

Treasury regulations that are identified as “major” regulations are subject to review by OMB’s OIRA before being issued, pursuant to Executive Order 13771. Now that OIRA review has been completed, Treasury and the IRS can be expected to release these proposed regulations for publication in the Federal Register—the exact date of publication not being known.

For more information, contact a tax professional with KPMG’s Washington National Tax practice:

Ruth Madrigal | +1 202 533 8817 |

Preston Quesenberry | +1 202 533 3985 | 

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