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131 STAT. 2157 PUBLIC LAW 115–97—DEC. 22, 2017 SEC. 13602. EXCISE TAX ON EXCESS TAX-EXEMPT ORGANIZATION EXECUTIVE COMPENSATION. (a) IN GENERAL.—Subchapter D of chapter 42 is amended by adding at the end the following new section: ‘‘SEC. 4960. TAX ON EXCESS TAX-EXEMPT ORGANIZATION EXECUTIVE COMPENSATION. ‘‘(a) TAX IMPOSED.—There 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 TAX.—The employer shall be liable for the tax imposed under subsection (a). ‘‘(c) DEFINITIONS AND SPECIAL RULES.—For purposes of this section— ‘‘(1) APPLICABLE TAX-EXEMPT ORGANIZATION.—The 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 EMPLOYEE.—For purposes of this section, the term ‘covered employee’ means any employee (including any former employee) of an applicable tax-exempt organization if the employee— ‘‘(A) is one of the 5 highest compensated employees of the organization for the taxable year, or ‘‘(B) was a covered employee of the organization (or any predecessor) for any preceding taxable year beginning after December 31, 2016. ‘‘(3) REMUNERATION.—For purposes of this section: ‘‘(A) IN GENERAL.—The 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 SERV- ICES.—The term ‘remuneration’ shall not include the por- tion of any remuneration paid to a licensed medical profes- sional (including a veterinarian) which is for the perform- ance of medical or veterinary services by such professional. ‘‘(4) REMUNERATION FROM RELATED ORGANIZATIONS.— ‘‘(A) IN GENERAL.—Remuneration of a covered employee by an applicable tax-exempt organization shall include any 26 USC 4960 note. VerDate Sep 11 2014 10:09 Oct 18, 2018 Jkt 079139 PO 00097 Frm 00105 Fmt 6580 Sfmt 6581 E:\PUBLAW\PUBL097.115 PUBL097 dkrause on DSKBC28HB2PROD with PUBLAWS