New IRS Guidance Throws a Pass to Certain Universities That Pay Coaches Compensation in Excess of $1,000,000

In Notice 2019-09 (“Notice”), the IRS provides relief from the new excise tax to certain colleges and universities that pay their “covered employees” more than $1 million per year or pay excess parachute payments.  Specifically, the Notice provides that the new excise tax under Code Section 4960 does not apply to a governmental entity (including a state college or university) that is not tax-exempt under Code Section 501(a) and does not exclude income under Code Section 115(l).  Therefore, those state universities that do not rely on either of these statutory exemptions from income are not subject to Code Section 4960 even if they pay their coaches (or other covered employees) more than $1 million.   Read More ›

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