Section 4960 Excise Tax Resources
The 2017 tax reform act introduced Code Section 4960, which imposes a 21% excise tax on certain pay to employees of non-profit organizations. As IPB flagged to its clients early on, the initial IRS interpretation extended this tax to companies whose employees also provide services to a related foundation, VEBA, or PAC.
In response to the initial IRS guidance, IPB filed comments explaining that the IRS interpretation was unnecessarily broad in various respects. IPB worked on behalf of its clients through Washington contacts to limit the scope of the IRS guidance. In response to IPB’s comments, the IRS final regulations included exemptions that should be available the vast majority of IPB clients who might otherwise have been subject to the excise tax by reason of having employees who provide services to both a for-profit corporation and not-for-profit organization.
Relevant 4960 Resources