Helping Hurricane Harvey Victims Through Leave-Based Donation Plans
Update: The IRS has now approved leave-based donations to programs that benefit victims of Hurricane Irma as well as Hurricane Harvey. Donations to the Red Cross will benefit both Harvey and Irma victims.
In light of the devastation caused by Hurricane Harvey in the last couple of weeks, you may have made personal donations, but perhaps you’ve wondered how your business can help people impacted by the storm. The IRS recently released Notice 2017-48 which allows employers to offer a leave-based donation plan to their employees. Rather than donate cash, employees can forego vacation or sick leave. Employers then compute the monetary value of the unused leave, and donate the cash to charities that benefit Hurricane Harvey victims.
The money is never included in the W-2 of the employee, and the employee does not receive a charitable deduction on his or her tax return. Employers are not required to treat the payment as a charitable contribution, and may deduct it as an ordinary business expense. To meet the requirements of Notice 2017-48, employers must make the cash donation to valid charities that qualify under 501(c)(3) of the Internal Revenue Code, the donation must be restricted to benefit victims of Hurricane Harvey or Tropical Storm Harvey, and the payment to the charity must be made before January 1, 2019.
Currently this Notice only applies to Hurricane Harvey and Tropical Storm Harvey. If this program is extended to other storms, we will update you. Please contact your CSH representative if you have any questions about the specifics of this Notice.
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