The American Institute of CPAs (AICPA) has submitted recommendations to the Department of the Treasury and the Internal Revenue Service (IRS) to address the need for guidance related to new section 4960 related to the excise tax on executive compensation paid by tax-exempt organizations.
The excise tax is imposed on applicable tax-exempt organizations and related entities for renumeration in excess of certain amounts received by a covered employee. The guidance in the proposed regulations assists in providing taxpayers clarity surrounding rules regarding the entity liable for the excise tax under section 4960, the determination of renumeration, how the excise tax is calculated and how taxpayers should report and pay the tax. Additionally, the proposed regulations contain helpful new provisions, including a series of exemptions from “covered employee” status, in several different situations.
The AICPA recommends that Treasury and the IRS provide guidance on the following issues related to the new section 4960:
- Filing Returns and Payment of Tax by Related Organizations
- Short-term Deferral Exception
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