WASHINGTON—NAFCU has written the Internal Revenue Service in opposition to the notice of proposed rulemaking regarding an excise tax on excess executive compensation for tax-exempt organizations.
“NAFCU asks the IRS to not include fringe benefits in excess of excludable amounts in the definition of excess renumeration,” wrote Senior Regulatory Affairs Counsel Kaley Schafer.
Schafer went on to note that excluding these fringe benefits will assist in attracting and retaining talent which, according to NAFCU’s 2019 Federal Reserve Study, is one of the top challenges anticipated by credit unions over the next three years.
In addition, Schafer urged the IRS to grandfather certain nonqualified deferred compensation plans to assist credit unions with attracting and retaining talent, as well as provide for the grandfathering of certain employee renumeration contracts on or before Nov. 2, 2017.
Helps Attract Talent
“Employee renumeration in the form of a deferred compensation plan helps attract talented executives with community-focused leadership skills to credit unions,” highlighted Schafer. “In addition, assessing an excise tax on certain compensation plans increases credit union expenditures.”
Last year the House Ways and Means Committee advanced legislation that included a provision to repeal the 21% excise tax imposed on certain fringe benefits in the Tax Cuts and Jobs Act (TCJA). NAFCU noted it has repeatedly reached out to and met with members of Congress to seek relief for credit unions from this new tax imposed on certain not-for-profits.