Guidance on Employer Leave Sharing Plans

New FAQs on employer leave sharing plans are available from the IRS. It clarifies the tax implications for employees.

May employers set up a leave-sharing plan under IRS 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?

ppp loan forgiveness applicationYes. Notice 2006-59 provides guidance on the federal tax consequences of certain leave-sharing plans that permit employees to deposit leave in an employer-sponsored leave bank for use by other employees who have been adversely affected by a major disaster such as the COVID-19 pandemic.  See Notice 2006-59 for the requirements of a qualifying leave-sharing plan.

Does an employee who deposits leave have any income tax consequences?

No. The employee who deposits leave need not include the deposited leave in income or wages.

May an employee who deposits leave claim an expense, charitable contribution, or loss deduction in the amount of the deposited leave?

No. An employee who deposits leave may not claim an expense, charitable contribution, or loss deduction with respect to the deposited leave.

View the IRS FAQs on employer leave sharing plans here.

Join Our Newsletter

Sign up to receive exclusive newsletters with the latest information affecting you and your organization.

Posted in

SHARE THIS POST