How have the excise tax changes under the TCJA affected tax exempt organizations?
Starting in 2018, §4960 imposes an excise tax on any organization that pays to
any covered employee more than $1 million in remuneration or pays an
excess parachute payment during the year. Screen OFF
(Officers, Directors, Employees), was updated to automatically
calculate the tax and answer corresponding questions on Form 990
and Form 990-PF.
The tax will be calculated if there is either excess executive compensation or parachute payments, and either Highest
compensated employee or Former covered employee is selected.
Excise Tax on Investment Income of Colleges and Universities:
§4968 imposes an excise tax on the net investment income of certain private colleges and universities. Use screen SCO (Schedule O) available from the Other Forms tab of the Data Entry Menu, to complete tests found in §4968 to determine if the organization is subject to this excise tax. If the organization has already determined that it is subject to the tax, complete Form 4720, Schedule O information on screen SCO and screen SCOR for any related organization.
Form 4720 will be available for e-file in early 2021 through Drake20. Once it is eligible for e-file, the IRS requires it to be e-filed.
For more details, see the Tax Cuts and Jobs Act, About Form 990, About Form 990-PF, or open the F1 field help for a particular data entry field within the tax program.