Hurricane Katrina: Leave-Based Donation Programs

Some employers may offer leave-based donation programs. Under such programs, employees may donate their unused vacation, sick or personal leave in exchange for the employer contributing the cash payment to a public charity, provided the money is designated for assisting Hurricane Katrina victims. Under Notice 2005-68, if employers operate such a program, they do not have to include the value of donated leave in their employees income, as long as the money was contributed by Dec. 31, 2006 to a charity (for which contributions are deductible, provided the money is earmarked for assisting Hurricane Katrina victims). Employers can deduct the donation as a charitable contribution (subject to normal limits) or as a business expense.

From Ruth Wimer, Washington, DC