August 7, 2020
IRS will allow leave sharing in connection with COVID-19
The IRS announced in its frequently asked questions (FAQs) about leave sharing plans that pursuant to Notice 2006-59, employers may allow employees to deposit leave in an employer-sponsored leave bank for use by other employees who have been adversely affected by COVID-19.
In IRS Notice 2006-59, non-federal employers may establish leave-sharing programs for employees unable to work as a result of a major disaster, due to, for instance, lack of transportation, an office or branch closing or similar situations.
Under a written plan of the employer, employees not affected by disaster are given a chance to help their colleagues by donating their accrued leave to co-workers who need the paid time off. (See 5 U.S.C. Section 6391 for the provisions governing federal government leave-sharing plans.)
An employee is considered to be adversely affected by a major disaster if the disaster has caused severe hardship to the employee or a family member of the employee that requires the employee to be absent from work.
The amount of leave donated represents federal taxable wages to the recipient and not to the donor; however, the donor may not claim a tax deduction for the donated leave.
The dollar value of the donated leave can be contributed into the leave bank such that, for instance, one hour of leave donated by a $100-per-hour employee equates to 10 hours of leave granted to a $10-per-hour employee.
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