In response to Hurricane Sandy, the IRS has released guidance for employers who are considering adopting leave-based donation programs to aid victims of the storm (Notice 2012-69). A leave-based donation program allows employees to forgo vacation, sick, or personal leave in exchange for cash payments by the employer to a charity.
Under Notice 2012-69, the IRS will not treat as gross income or wages of the employees’ cash charitable donations made by their employer to a Sec. 170(c) organization in exchange for vacation, sick, or personal leave that the employees elect to forgo. The payments must be paid before January 1, 2014, and must be made to a Sec. 170(c) organization for the relief of victims of Hurricane Sandy. However, employees who leave under the program will not be allowed to take a charitable donation for the value of the leave excluded from their compensation. Employers will be allowed to deduct these cash payments either as charitable contributions or gifts under Sec. 170 or as trade or business expenses under Sec. 162.
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