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IRS guidance on excise tax for executive pay leaves questions for hospitals
Modern Healthcare

Hospital executives probably aren’t too stoked about the Internal Revenue Service’s recent notice on how the new excise tax on executive pay applies to their organizations.

The interim guidance clarifies how not-for-profit organizations should implement the 21% excise tax on executive compensation that exceeds $1 million, part of the Tax Cuts and Jobs Act of 2017. It says that payment for duties like teaching and performing research are indeed subject to the tax. Many health systems’ highest-paid employees are physician-executives, whose salaries cover both administrative duties and medical services.

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