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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

IRS (Non-Substantive) Correction to Final Regulations (May 2021) 

IRS Final Regulations (January 2021)

IPB News Release Re Proposed Regulations (June 2020)

IRS Proposed Regulations (June 2020)

IPB (April 2019) Q&A Regarding Section 4960

IPB (April 2019) Comment Letter to the IRS

IPB Alert (February 2019) Unexpected Effect of 4960 Excise Tax

IRS Notice 2019-09 (January 2019) – Interim Guidance Under Section 4960

IPB Alert (February 2019) Unexpected Effect of 4960 Excise Tax

News

Spencer Walters Authors Opinion Piece for Washington Business Journal on 4960 Excise Tax (4/25/19 )

Spencer Walters Speaks with Chronicle of Philanthropy Regarding 4960 Excise Tax (4/11/19)

Spencer Walters Interviewed in Nonprofit World Regarding Impact of the 4960 Excise Tax (6/4/19 )

Spencer Walters Speaks with Bloomberg Tax on Proposed 4960 Rules from IRS (6/9/20)

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