The IRS has provided guidance on the federal income and employment tax treatment of cash payments made by employers under leave-based donation programs to aid victims of the Russian invasion of Ukraine.
Under employer leave-based donation programs, employees can elect to forgo vacation, sick, or personal leave in exchange for their employers making cash payments to tax-exempt charitable organizations described in section 170(c) of the Code (section 170(c) organizations). Cash payments made by an employer to such section 170(c) organizations under an employer leave-based donation program are referred to as “employer leave-based donation payments.”
Employer leave-based donation payments made by an employer before January 1, 2023, to tax-exempt organizations to aid victims of the Russian invasion of Ukraine (qualified employer leave-based donation payments) will not be treated as gross income or wages (or compensation, as applicable) of the employees of the employer. Similarly, employees electing or with an opportunity to elect to forgo leave that funds the qualified employer leave-based donation payments will not be treated as having constructively received gross income or wages (or compensation, as applicable).
For more info, see https://www.irs.gov/pub/irs-drop/n-22-28.pdf
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𝐓𝐡𝐨𝐦𝐚𝐬 𝐉𝐚𝐦𝐞𝐬 𝐂𝐚𝐫𝐫𝐨𝐥𝐥, 𝐏.𝐂. 𝐢𝐬 𝐚 𝐥𝐚𝐰 𝐟𝐢𝐫𝐦 𝐟𝐨𝐜𝐮𝐬𝐢𝐧𝐠 𝐨𝐧 𝐟𝐞𝐝𝐞𝐫𝐚𝐥 𝐚𝐧𝐝 𝐬𝐭𝐚𝐭𝐞 𝐭𝐚𝐱𝐞𝐬 𝐭𝐡𝐚𝐭 𝐩𝐫𝐨𝐯𝐢𝐝𝐞𝐬 𝐢𝐧𝐝𝐢𝐯𝐢𝐝𝐮𝐚𝐥𝐬 𝐚𝐧𝐝 𝐛𝐮𝐬𝐢𝐧𝐞𝐬𝐬𝐞𝐬 𝐰𝐢𝐭𝐡 𝐭𝐚𝐱 𝐡𝐞𝐥𝐩 𝐚𝐧𝐝 𝐬𝐨𝐥𝐮𝐭𝐢𝐨𝐧𝐬 𝐟𝐨𝐫 𝐭𝐨𝐝𝐚𝐲 𝐚𝐧𝐝 𝐭𝐨𝐦𝐨𝐫𝐫𝐨𝐰.
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