Last month, the IRS released GLAM 2026-001 clarifying that applicable tax-exempt organizations ("ATEOs") cannot escape the IRC Section 4960 excise tax on excess executive compensation simply because a covered health insurance provider ("CHIP") is part of their affiliated group.  Because IRC Section 4960 only excludes remuneration where a deduction was actually disallowed under Section 162(m), and ATEOs can't claim deductions on tax-exempt income, no disallowance can occur. The GLAM also explicitly repudiates Chief Counsel Advice 201752008 (2017), warning that reliance on it does not qualify as a "reasonable, good faith interpretation" of IRC Section 4960 — in part because that CCA was issued before IRC Section 4960 was enacted. 

Essentially, Congress designed IRC Section 4960 to level the playing field between for-profit and tax-exempt employers on the tax treatment of excessive executive compensation, and the IRS will not permit affiliated-group structures to circumvent that intention.