On its website, the IRS has said that employers may set up a leave-sharing plan that permits employees to deposit leave in an employer-sponsored leave bank for use by other employees who have been adversely affected by the COVID-19 pandemic. An employee who deposits leave need not include the deposited leave in income or wages.
Background.
Notice 2006-59, 2006-2 CB 60, provides that a leave donor who deposits leave in an employer’s leave bank (as part of a major disaster leave-sharing plan) does not realize income, wages, compensation, or rail wages with respect to deposited leave. See Favorable tax treatment accorded disaster leave-sharing plans (06/22/2006).
A major disaster leave-sharing plan is a written plan whereby the plan allows a leave donor to deposit accrued leave in an employer-sponsored leave bank for use by other employees who have been adversely affected by a major disaster.
A leave donor means a current employee of the employer whose voluntary written request to deposit leave in a leave bank under a major disaster leave-sharing plan is approved by the employer.
On March 13, 2020, the President issued an emergency declaration under the Robert T. Stafford Disaster Relief and Emergency Assistance Act in response to the ongoing COVID-19 pandemic.
COVID-19 leave sharing.
The IRS website says that employers may set up a leave-sharing plan under Notice 2006-59 that permits employees to deposit leave in an employer-sponsored leave bank for use by other employees who have been adversely affected by the COVID-19 pandemic.
The website says that an employee who deposits leave should not include the deposited leave in income or wages. But an employee who deposits leave may not claim an expense, charitable contribution, or loss deduction with respect to the deposited leave.
To continue your research on major disaster leave sharing plans, see FTC 2d/FIN ¶H-1013.1.
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