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Legal Insights and Perspectives for the Healthcare Industry
In this LawFlash, our Tax and Employee Benefits and Executive Compensation teams describe proposed regulations recently released by the Internal Revenue Service implementing Internal Revenue Code Section 4960. Section 4960 imposes a 21% excise tax on certain executive compensation paid to employees of tax-exempt organizations, including nonprofit hospital systems.
The 2017 Tax Cuts and Jobs Act, Section 4960 imposes a 21% excise tax on certain executive compensation in excess of $1 million as well as certain excess parachute payments paid to a “covered employee” by tax-exempt entities, including tax-exempt hospitals and health systems.