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NAFCU Senior Regulatory Affairs Counsel Kaley Schafer wrote to the Internal Revenue Service (IRS) Friday to urge against 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,” Schafer wrote.

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 November 2, 2017.

“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, following NAFCU’s advocacy efforts the House Ways and Means Committee advanced legislation that included a provision to repeal the 21 percent excise tax imposed on certain fringe benefits in the Tax Cuts and Jobs Act (TCJA). The association 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.

NAFCU will continue to monitor the proposed rulemaking; stay tuned to NAFCU Today for updates on any new developments.