On March 13, 2020, President Trump declared a national emergency under the Robert T. Stafford Disaster Relief and Emergency Assistance Act (the “Declaration”) due to extraordinary circumstances resulting from Coronavirus. This Declaration opens up new methods for employers to provide tax-favored financial assistance to employees who are affected, directly or indirectly, by the virus.
Robert C. Louthian, III, represents exempt organizations on a wide range of tax and related issues, including determinations of exempt status, securing private letter rulings on proposed transactions, and preparing and representing clients who are under audit by the Internal Revenue Service. He works primarily with hospitals and other institutional providers, private foundations, scientific research organizations, universities, trade associations and corporate foundations. Robert has extensive experience in the formation of provider networks, integrate delivery systems, conversions of tax-exempt organizations and joint ventures with tax-exempt participants. Read Robert Louthian's full bio.
As an update on an important matter that we raised during McDermott’s May 8 Tax Symposium, it is critical to promptly assess whether to report any excise taxes imposed under Section 4960 as the deadline for filing Form 4720 is May 15, 2019 for calendar year taxpayers. Section 4960 of the Internal Revenue Code imposes a 21% excise tax on compensation over $1 million paid to the five highest paid employees of a tax exempt organization, including a private foundation (PF). For purposes of applying Section 4960, the Internal Revenue Service includes compensation paid by related taxable organizations, which may include publicly held or privately held corporations that control who sits on the PF’s board of trustees.
Set forth below are the key issues relevant to establishing a reasonable, good faith position under Notice 2019-9 that the Section 4960 excise tax should not apply to volunteer officers of a PF who receive all of their compensation from taxable organizations related to such PF. What is important to understand is that the Section 4960 excise tax only applies if volunteer officers are treated as employees of the related PF. Whether an employee relationship exists is a facts and circumstances test, and having someone serve as an officer to meet state law nonprofit corporation requirements does not result, by itself, in employee status.
We have also provided steps that companies may follow in developing the facts necessary to establish such reasonable, good faith position pending the issuance of proposed regulations. Please feel free to contact us for assistance in developing such position or with any questions concerning Section 4960.
One of the more controversial and complex provisions of the Tax Cuts and Jobs Act has been the 21 percent excise tax on certain nonprofit executive compensation. On December 31, 2018, the IRS issued interim guidance that addresses how this tax will apply in various situations that commonly arise for tax-exempt employers. Establishing internal systems…
As part of its comprehensive 2017 tax reform bill, Congress repealed deductions for Qualified Transportation Fringes including for employer-provided parking, while also requiring that tax-exempt organizations increase their unrelated business taxable income by the nondeductible parking expenses. Recently released IRS Notice 2018-99 addresses some of the year-end tax filing and tax planning concerns for affected…
Tax-exempt organizations—especially hospitals and health systems—face a new tax reality now that both houses of Congress have voted to pass the final tax reform bill.
The Senate’s final tax reform bill contains several troubling provisions for tax-exempt organizations but represents an improvement over last month’s proposed legislation, which caused concern across the nonprofit sector.
Section 139 of the Internal Revenue Code allows an employer to provide tax-free qualified disaster relief payments to Texas and Louisiana employees in designated areas affected by Hurricane Harvey.