IRS Gives Employees and Employers Unique Way To Help Katrina
Victims
The IRS has never been known as a creative beaurocracy. To
promote donations to Katrina victims, however, it is being very
creative.
The IRS has come up with Hurricane Katrina Leave Donation
Program to help out those in need through special tax treatment
rules. In a ground breaking program, employees can donate their
vacation and sick leave donations by asking their employer to
make a cash donation equivalent to the amount that would
otherwise be paid.
Employees
Employees benefit from this new program in two ways. First, they
can make donations without taking money out of their current
cash savings. Second, the employee will not be responsible for
paying takes on the donated time, which would obviously be a
huge deterrent.
Employers
Employers also benefit in two ways with this unique program.
Initially, they can work hand in hand with employees to help the
relief effort. Second, the employer can deduct the cash payments
as either a charitable contribution or normal business
deduction. Importantly, employers are NOT required to pay
employment taxes on any donations. This fact alone makes
participating in the Hurricane Katrina Leave Donation Program a
worthwhile venture.
The IRS has really stepped to the plate to help the victims of
Hurricane Katrina. Often reviled, the Agency should get a
standing ovation for taking these steps.