‘Coach Tax’ Carveouts Cheered By Nonprofit, Investment Groups

Exceptions included in IRS proposed rules would spare nonprofits from an overly broad tax on high-paid employees, industry groups told the agency.

The IRS in June proposed (REG-122345-18) exceptions to a 21% excise tax on a nonprofit’s five most highly compensated employees earning $1 million a year or more. Multiple groups, ranging from the Reinsurance Association of America to the Council on Foundations, applauded the carveouts, which exempt from the tax employees who volunteer or spend limited time at a nonprofit, for example.

The “limited hours exception,” which applies to employees who spend fewer than 100 ...