In response to the COVID-19 pandemic, the IRS granted tax relief for employer-sponsored leave donation programs that allow employees to donate vacation, sick, or personal leave in exchange for cash payments made by their employers to charitable organizations for the relief of victims of the COVID-19 pandemic. Under the tax relief set out in IRS Notice 2020-46, employees were not taxed on such donations as long as the donation was made before January 1, 2021. The conditions of the leave programs and the related tax relief under IRS Notice 2020-46 are outlined here.
On June 30, 2021, the IRS extended this tax relief to donations made before January 1, 2022. Given that this extension has been made mid-year, it may be too late for an employer who did not already have such a donation program in place to adopt one now. However, for employers who have already adopted a leave-donation program pursuant to IRS Notice 2020-46 and who have continued the program, this extended favorable tax treatment for employees is welcome relief.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
