IRS Proposes Guidance for Taxing Highly Compensated Employees
February 15, 2019
After issuing preliminary guidance clarifying when nonprofits must pay the 21 percent unrelated business income tax related to employee parking, the Internal Revenue Service (“IRS”) has published Notice 2019-09 explaining when nonprofit employers should pay the 21 percent tax on employees with an annual compensation above $1 million. The preliminary guidance advises nonprofits to use the calendar year ending within their fiscal year to calculate the tax. In addition, nonprofits cannot avoid the tax by dividing highly compensated employees’ compensation between multiple related organizations.