Medical Services Remuneration Exclusion

§ 4960. Tax on excess tax-exempt organization executive compensation(a) Tax imposedThere is hereby imposed a tax equal to the product of the rate of tax under section 11 and the sum of—(1) so much of the remuneration paid (other than any excess parachute payment) by an applicable tax-exempt organization for the taxable year with respect to employment of any covered employee in excess of $1,000,000, plus (2) any excess parachute payment paid by such an organization to any covered employee. For purposes of the preceding sentence, remuneration shall be treated as paid when there is no substantial risk of forfeiture (within the meaning of section 457(f)(3)(B)) of the rights to such remuneration. (b) Liability for taxThe employer shall be liable for the tax imposed under subsection (a). (c) Definitions and special rulesFor purposes of this section—(1) Applicable tax-exempt organizationThe term “applicable tax-exempt organization” means any organization which for the taxable year—(A) is exempt from taxation under section 501(a), (B) is a farmers’ cooperative organization described in section 521(b)(1), (C) has income excluded from taxation under section 115(1), or (D) is a political organization described in section 527(e)(1). (2) Covered employeeFor purposes of this section, the term “covered employee” means any employee of an applicable tax-exempt organization (or any predecessor of such an organization) and any former employee of such an organization (or predecessor) who was such an employee during any taxable year beginning after December 31, 2016. (3) RemunerationFor purposes of this section:(A) In generalThe term “remuneration” means wages (as defined in section 3401(a)), except that such term shall not include any designated Roth contribution (as defined in section 402A(c)) and shall include amounts required to be included in gross income under section 457(f). (B) Exception for remuneration for medical servicesThe term “remuneration” shall not include the portion of any remuneration paid to a licensed medical professional (including a veterinarian) which is for the performance of medical or veterinary services by such professional. (4) Remuneration from related organizations(A) In generalRemuneration of a covered employee by an applicable tax-exempt organization shall include any remuneration paid with respect to employment of such employee by any related person or governmental entity. (B) Related organizationsA person or governmental entity shall be treated as related to an applicable tax-exempt organization if such person or governmental entity—(i) controls, or is controlled by, the organization, (ii) is controlled by one or more persons which control the organization, (iii) is a supported organization (as defined in section 509(f)(3)) during the taxable year with respect to the organization, (iv) is a supporting organization described in section 509(a)(3) during the taxable year with respect to the organization, or