Partners spread word on leave-donation program

WASHINGTON-A broad coalition of business and charitable associations has joined with the Internal Revenue Service and the Department of Treasury in a partnership aimed at educating the nation’s employers about a leave-donation program benefiting Hurricane Katrina victims. The leave-donation program offers favorable tax treatment for employees who donate annual, sick or personal leave back to their employer. The employer converts the leave into cash and makes a contribution to a qualified charity supporting Katrina relief and recovery efforts. The employee does not pay taxes on the value of the leave, and the employer may deduct the amount as either a charitable donation or as a business expense. “Companies and employees across the country have been deeply moved by the recent disasters affecting the Gulf Coast,” said Stephen Jordan, of the U.S. Chamber of Commerce’s Center for Corporate Citizenship. “The IRS programs provide a creative way for hard-working employers and employees to contribute in a concrete and practical way.” “Everybody wins under this program,” said Mark W. Everson, IRS commissioner. “Employees can give without paying cash. Companies get the tax deduction. And the money gets to people in need.” A leave-donation program can be adopted and administered easily. Employers must follow certain guidelines, but no IRS approval is required and there are no special reporting requirements. The amounts contributed are not subject to employment taxes and are deductible for the employer. This program will extend through the end of 2006. People will have a chance to donate even if they’ve used their vacation time for this year. The cash contribution by the employer must be made to a qualified tax-exempt organization, dedicated to Hurricane Katrina relief and paid to the organization by December 31, 2006. A leave-donation program makes it easier for employees to help Hurricane Katrina victims without tapping their own cash reserves. Employees also can donate the leave with no impact on their income or taxes.