Employer Leave-Based Donation Programs Are Extended

The IRS is extending the tax relief for employer leave-based donation programs aiding victims of the COVID-19 pandemic that was previously provided in Notice 2020-46. The relief offered in response to the COVID-19 pandemic is now extended through December 31, 2021.

employee retention creditUnder Notice 2021-42, leave-based donation programs are cash payments employers make to charitable organizations that provide relief to victims of COVID-19, in exchange for sick, vacation or personal leave which their employees forgo, will not be treated as compensation. Similarly, 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 may deduct these cash payments as a business expense or as a charitable contribution deduction if the employer meets certain requirements.

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