IRS Treatment of Leave-Based Donation Programs

On November 19, 2018, the Internal Revenue Service (IRS) issued Notice 2018-89, providing guidance on the treatment of leave-based donation programs to aid victims of Hurricane Michael.

In response to the extreme need for charitable relief for victims of Hurricane Michael, employers may have adopted or may be considering adopting leave-based donation programs. Under leave-based donation programs, employees can elect to forgo vacation, sick, or personal leave in exchange for cash payments that the employer makes to charitable organizations described in § 170(c) of the Internal Revenue Code (§ 170(c) organizations). This notice provides guidance for income and employment tax purposes on the treatment of cash payments made by employers under leave-based donation programs for the relief of victims of Hurricane Michael.