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May 11, 2018

Michael Rosenbaum Quoted in Bloomberg BNA on Excise Tax for Nonprofits

Chicago partner Michael Rosenbaum was quoted in a Bloomberg BNA article titled “Trump Tax Law Squeezes Nonprofit Hospitals.” President Trump’s Tax Cuts and Jobs Act imposes a 21 percent excise tax on nonprofit executive compensation over $1 million. The tax is charged to the company—not the employee—and hospitals and other tax-exempt organizations are trying to determine how much of a hit they will take.

“Most of the businesses in the country are just private companies, and they don’t pay any excise tax [on executive compensation],” Michael said. “It puts tax-exempt organizations a little bit on an unfair playing field versus their for-profit competitors. And it’s taking money that could otherwise be used for charitable purposes.”

The new excise tax does not apply to compensation an employee receives for performing medical services. The American Hospital Association has asked the IRS and the Treasury Department for guidance and clarification regarding the exception. Michael stated that he anticipates the IRS or Treasury Department will release proposed regulations to address this and other open issues.

Read "Trump Tax Law Squeezes Nonprofit Hospitals.” (subscription required)

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