Pandemic relief extended for donated vacation

Federal tax relief has been extended for calendar year 2021 for employers that let employees donate sick, vacation, or personal leave to charity.

Notice 2021-42 provides that cash payments made to charitable organizations that provide relief to victims of the COVID-19 pandemic by employers in exchange for sick, vacation, or personal leave that their employees forego will not be treated as compensation.

Similarly, the employees will not be treated as receiving the value of the leave as income and cannot claim a deduction for the leave that they donated to their employer.

Employers, however, may deduct these cash payments as a business expense or as a charitable contribution deduction if the employer otherwise meets the respective requirements.

Notice 2020-46 also provides more details for employers with leave-based donation programs.

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IRS Tax regulations Charitable deductions Coronavirus
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