September 29, 2005 | Read Time: 2 minutes
Commissioner of Internal Revenue Mark W. Everson is urging charities that help Hurricane Katrina victims to encourage companies to promote an unusual effort that allows employees to use their vacation days to benefit relief groups.
The Internal Revenue Service and Treasury Department announced that the government has endorsed “leave-based donation” plans that allow company employees to return to their employer any vacation, sick, or leave days they have accrued. In exchange, the employer gives the value of the time, converted to cash, to charities providing relief to hurricane victims.
“I really want to encourage 501(c)(3)s that would benefit from this to talk to their corporate donors, the companies they work with, their sponsors, and say, Hey, are you aware of this program? Is this of interest to you?” said Mr. Everson in an interview.
Under the plan, employees do not have to include the value of their donated leave in their gross income, and employers are permitted to deduct the amount of the cash payment to charity as a business expense. The program — which is in effect through December 31, 2006 — was offered in a similar manner following the terrorist attacks of September 11, 2001.
The IRS announcement and an explanation of the program, Notice 2005-68, are available online at http://www.irs.gov/newsroom/article/0,,id=147373,00.html.
“There are a lot of people who want to do something to help out, but they may not have any available money to do that and they may not be able to volunteer in a meaningful way,” said Mr. Everson. “This program enables them to do something.”
Meanwhile, the revenue service has issued what it calls “streamlined loan procedures and liberalized hardship distribution rules” to make it easier for victims of Hurricane Katrina who have 403(b) retirement plans to withdraw money from the accounts.
Information about the announcement from the Internal Revenue Service is available online at http://www.irs.gov/newsroom/article/0,,id=148129,00.html.
