IRS Approves Additional Leave-Based Donation Programs for COVID-19 Relief

We previously posted about two leave-sharing programs available to employers during the COVID-19 pandemic: major disaster leave-sharing programs and medical emergency leave-sharing programs.  These leave-sharing programs may allow employees to donate paid leave to co-workers affected by COVID-19.  When properly structured under Internal Revenue Service (“IRS”) guidance, the donated leave is excluded from the gross income of the donor employee. 

On June 11, 2020, the IRS published Notice 2020-46, which permits employers to establish an additional type of leave-sharing program: a leave-based donation program under which employees can donate vacation, sick, or personal leave in exchange for cash payments that the employer makes to a charitable organization described in Internal Revenue Code (the “Code”) Section 170(c) (a “Section 170(c) Organization”). Read More ›

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Design Considerations for Medical Emergency Leave-Sharing Programs

Employers often allow employees to donate leave to co-workers who are experiencing medical emergencies. If properly structured, these leave transfers can be excluded from the gross income of the donor employee and included in the gross income of the co-worker recipient.  There are no statutes or regulations governing these arrangements. The only formal guidance available to employers seeking this favorable tax treatment for medical emergency leave-sharing programs is Revenue Ruling 90-29 (“Rev. Rul. 90-29”). Other leave-sharing programs, such as those for major disasters or military leave, are subject to different rules and may or may not receive similar tax treatment.

Departure from the medical emergency leave-sharing program design approved by the IRS in Rev. Read More ›

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