Nonprofit Tax Quandary

Nonprofit Tax Quandary

An interesting feature of the 2018 tax bill is the 21% excise tax to be imposed on salaries and “parachute payments” (severance payments) in excess of $1 million paid by tax exempt organizations.  This currently applies to charities, universities, churches etc. – all tax exempt organizations.  For example, the University of Alabama which pays football coach Nick Saban $11 million will be subject to an excise tax of $2 million.

This tax may provide an unwelcome tax bill to universities, major charities, mega churches and, possibly, political organizations. It will also be a bonanza to tax and legal professionals seeking methods to mitigate its results!

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