The Tax Cuts and Jobs Act of 2017 added Code Section 4960 to the Internal Revenue Code, which is intended to tax excessive compensation of executives providing services to tax-exempt entities. The limitations apply to tax years beginning on or after January 1, 2018. The Treasury Department previously published proposed regulations and issued interim guidance in the form of an IRS notice (IRS Notice 2019-60). Final regulations were published on January 19, 2021. The final regulations are effective for tax years beginning on or after January 1, 2022. In the interim, taxpayers can rely on guidance set forth in the proposed regulations and interim guidance. This update summarizes the statute and final regulations, which represent the first time that the IRS has attempted to assess penalty taxes on excessive compensation of tax-exempt executives. Continue reading >