The IRS and the Department of Treasury have announced that a broad coalition of business and charitable associations have joined them in a partnership aimed at educating the nation's employers about the leave donation program.

This program offers favorable tax treatment for employees who donate annual, sick or personal leave back to their employer. The employer converts the leave into cash and makes a contribution to a qualified charity supporting Katrina relief and recovery efforts. The employee does not pay taxes on the value of the leave, and the employer may deduct the amount as either a charitable donation or as a business expense.

A leave-donation program can be adopted and administered easily. Employers must follow certain guidelines, but no IRS approval is required and there are no special reporting requirements. The amounts contributed are not subject to employment taxes and are deductible for the employer. This program will extend through the end of 2006. People will have a chance to donate even if they've used their vacation time for this year.

The cash contribution by the employer must be made to a qualified tax-exempt organization, dedicated to Hurricane Katrina relief and paid to the organization by December 31, 2006.

A leave-donation program makes it easier for employees to help Hurricane Katrina victims without tapping their own cash reserves. Employees also can donate the leave with no impact on their income or taxes.

The IRS does not endorse specific charities. However, the traditional role of many charities places them on the frontlines of relief and recovery efforts. Their success depends on contributions large and small.

...back to 29 September 2005

Further Information:
Partners Spread the Word on Leave-Donation Program
Leave Donation Program

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