The IRS today released an advance version of Notice 2016-55 as guidance on the treatment of leave-based donation programs that are intended to aid victims of the severe storms and flooding in Louisiana that began August 11, 2016 (the Louisiana storms).
Notice 2016-55 [PDF 14 KB] explains that in response to the need for charitable relief for victims of the Louisiana storms, employers may have adopted or may be considering adopting leave-based donation programs. Under these programs, employees can elect to forgo vacation, sick, or personal leave in exchange for cash payments that the employer then makes to charitable organizations.
Notice 2016-55 provides guidance for income tax and employment tax purposes on the treatment of such cash payments made by employers under leave-based donation programs when made for the relief of victims of the Louisiana storms.
The IRS stated that it will not assert that:
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