January 9, 2019 - On December 31, 2018, the Treasury Department and the IRS issued interim guidance on Section 4960 of the Internal Revenue Code, which imposes a 21 percent excise tax on the amount of remuneration in excess of $1 million and any excess parachute payment paid by an applicable tax-exempt organization to a covered employee. The Tax Cuts and Jobs Act initiated this tax to take effect for tax years beginning after 2017 on the salaries of the five most highly compensated employees.
In addition to providing employers implementations instructions for the new tax, the interim guidance also instructs employers to use a “good faith, reasonable interpretation of the statute,” until further guidance is issued. For further details, see Notice 2019-09.
This followed the December 10 issuance of interim guidance on computing parking fringe benefits as unrelated business taxable income and and relief from underpayment. See Notice 2018-99 and Notice 2018-100.