In response to the need to provide relief to victims of the COVID-19 pandemic, 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.
The icing on the cake? The IRS has published a Notice stating that these donations:
- Do not count as wages. Cash payments made by an employer under a leave-based donation program will not constitute employee wages if they are paid before 1/1/21 to Section 170(c) organizations for the relief of COVID-19 victims.
- Do not apply as a receipt of gross income or employee wages.
- Leave-sharing donations don’t need to be included on Form W-2, and
- Employers may deduct the payments as a Section 162 business expense, or as a charitable contribution.
Contact your K·Coe tax advisor with any questions.