WASHINGTON—A provision in the Economic Mobility Act of 2019 that would repeal the 21% excise tax imposed on certain not-for-profits’ fringe benefits and compensations plans that has been passed by the House Ways and Means Committee, a move that has drawn praise from NAFCU.
The excise tax was originally included as part of the Tax Cuts and Jobs Act (TCJA), which applied to certain credit union compensation packages this year for the first time.
Additionally, before the bill’s markup, NAFCU had also urged the committee to include in the bill a technical correction to the TCJA that would treat executive compensation contacts at not-for-profits the same as for-profits.
Under the TCJA, for-profit executive compensation contracts that were in effect prior to Nov. 2, 2017 are able to remain exempt from deductibility limits. However, no grandfathering provision was included in the section dealing with not-for-profit executive compensation contracts.
‘Not the Intent’
“We do not believe it was the intent of the TCJA to disadvantage the not-for-profit sector vis-à-vis the for-profit sector in such a way, and would urge a fix to the TCJA to provide not-for-profits a similar grandfather clause to what is enjoyed by for-profits,” wrote NAFCU Vice President of Legislative Affairs Brad Thaler, in a letter to the committee.
NAFCU said it has long urged Congress to provide a technical correction to the TCJA to fix this disparity, and that association will continue to urge lawmakers to include language that would treat the grandfathering of executive compensation contracts at not-for-profits and for-profits equally.