Interim Guidance on Section 4960 Excise Tax Allocations: Considerations for Tax-Exempt Healthcare Organizations

Introduction and Background

The Tax Cuts and Jobs Act of 2017 (TCJA) adds Section 4960 to the Internal Revenue Code (IRC). Section 4960 imposes an excise tax¹ for remuneration² paid by an applicable tax-exempt organization (ATEO)³ to any covered employee⁴ in excess of $1 million plus any excess parachute payment⁵ paid by such organization to any covered employee.