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Expert Analysis

Nonprofits Should Be Wary Of Excise Tax Complexity

By Daniel Morgan (January 31, 2019, 5:15 PM EST) -- As part of 2017's Tax Cuts and Jobs Act, Congress added new Section 4960 to the Internal Revenue Code. Section 4960 imposes an excise tax — currently set at 21 percent — on "applicable tax-exempt organizations" that pay annual remuneration to an employee in excess of $1 million or that make one or more "parachute payments" to an individual upon an involuntary separation from service, which equal or exceed three times the individual's five-year average annual pay. The Internal Revenue Service issued guidance on many of the key aspects of Section 4960 at the end of 2018....

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