Introduction

Tax Bill Triple X — Excise Tax on Excess Exempt Organization Compensation

January 10, 2018 - 1:00 pm to 2:00 pm (ET)

SPECIAL ALERT!

EXEMPT ORGANIZATIONS THAT PAY EMPLOYEES OVER $1,000,000 WILL BE SUBJECT TO 21% EXCISE TAX!

Just in time for Christmas, Congress gave us the gift of a comprehensive overhaul of the Tax Code.  But there may be a package under the tree of some nonprofit hospitals and health systems that contains a lump of coal.  Tucked away in this 494-page bill that was recently approved by the House of Representatives is a new provision that will impose a 21% excise tax on compensation in excess of $1,000,000 paid by exempt organizations to their five highest compensated employees.  A last minute amendment exempts compensation paid to physicians, but it only applies to compensation for medical services.

Like anything dealing with taxes, the devil is in the details.  Hospitals and health systems would be well advised to review their executive compensation arrangements and policies as soon as possible to determine how this will impact them going forward. There may also be opportunities to establish deferred compensation plans that will reduce the compensation subject to the tax or even bring it below the $1,000,000 threshold.

In addition, even though compensation for medical services is not covered, it would be wise to review all existing physician compensation arrangements to make sure that medical and administrative compensation is separately accounted for, to avoid arguments later on as to whether the medical services exception applies.  And the decision by Congress to categorically exempt physician compensation from the excess compensation rules raises interesting questions as to how fair market value and commercial reasonableness should be analyzed for the purposes of the Stark Law.

Dan Mulholland and Henry Casale will present this special audio conference called:

Tax Bill Triple X — Excise Tax on Excess Exempt Organization Compensation
January 10, 2018
1:00 to 2:00 p.m. ET

Join us to learn all about this new law and how it will affect you.

Register online (requires log in) or click here for a registration form to print and fax to us at 412.687.7692.