Whether nonprofit organizations provide charity, education or health care, entities that are organized and operated under Section 501(c)(3) of the Internal Revenue Code must be mindful of specific tax rules that do not apply to private or public companies when structuring compensation arrangements to attract, motivate and retain executive level talent. "Executive Compensation in the Tax-Exempt World: A Review of Applicable Tax Laws," examines the restrictive tax provisions of Section 457 and of the excess benefit transaction rules, which both create a challenging legal environment for tax-exempt entities when they compete with taxable entities for executive-level talent.
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