Preparing Tax-Exempt Organizations for the New Covered Employee Rules for the Expanded Code §4960 Excise Tax

Дата публикации: 17-06-2026 00:00:00

Key Takeaways:
The OBBBA significantly expanded Code §4960 for taxable years beginning after Dec. 31, 2025, broadening the scope of employees that tax-exempt organizations must evaluate for potential excise tax exposure.
The definition of “covered employee” for tax-exempt organizations now covers any employee of a tax-exempt organization who receives remuneration exceeding $1 million or an excess parachute payment during the applicable taxable year — extending Code §4960 beyond the prior focus on an organization's five highest-compensated employees.
Tax-exempt organizations should review compensation arrangements, deferred compensation plans and compliance processes before the new rules take effect, particularly where compensation may approach or exceed the $1 million threshold.
The One Big Beautiful Bill Act (OBBBA) amended Code §4960, which imposes an excise tax on certain excess compensation and excess parachute payments paid by applicable tax-exempt organizations. The IRS… Read the complete article here...
© Polsinelli PC, Polsinelli LLP in California

Классификация: Экономика

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