Leave-based donation programs for hurricane victims
In the wake of Hurricane Irma, many employers are considering leave-based donation programs. Under these programs, employees may elect to forgo vacation, sick, or personal leave in exchange for employer contributions to charitable organizations.
In a recent notice, the IRS announced that cash payments made by an employer under a leave-based donation program will not constitute employee wages if they are paid before 1/1/2019 to Section 170(c) organizations for the relief of Hurricane Irma victims.
In addition, the IRS will not assert that the opportunity to participate in a leave-based donation program results in constructive receipt of gross income or employee wages. Leave-sharing donations don’t need to be included in Box 1, 3, or 5 of Form W-2, and employers may deduct the payments as ordinary and necessary business expenses under IRC Sec. 162 rather than IRC Sec. 170.
This is similar to relief provided to victims of Hurricane Harvey.
We hope this information has been helpful to you. If you have further questions about this announcement, please contact your Whalen & Company representative.
Sources:
Thomson Reuters