The IRS has extended through 2021 the tax benefits provided to employers for leave-based donation programs that aid victims of the COVID-19 pandemic.
What Are Leave-Based Donation Programs?
Under leave-based donation programs, employees can forgo their vacation, sick, or personal leave in exchange for cash payments made by their employer to Section 170(c) charitable organizations.
The donated leave won’t be considered taxable compensation, but employees won’t be able to claim a charitable contribution deduction for the donated leave. Employers, however, can deduct the payments as a business expense or as a charitable contribution.
The guidance was announced in Notice 2021-42. Issued by the IRS in June 2021, it extends previous relief provided in Notice 2020-46—which allowed leave-based donations in 2020—through 2021. To qualify, employers must make cash donations to Section 170(c) organizations between December 31, 2020, and January 1, 2022.
We’re Here to Help
For more information about the leave-based donation program, contact your Moss Adams professional.
For regulatory updates, strategies to help cope with subsequent risk, and possible steps to bolster your workforce and organization, please see the following resources: