Donate Accrued PTO to Help Hurricane Victims

Donate the Value of Your PTO to Hurricane Victims

IRS Will Allow Tax Deduction!


Many Americans have witnessed the devastation caused by Hurricane Harvey and wanted to help. Donations of food, clothing, and water are slowly making their way down to affected areas. Many people have made monetary donations through various not for profit charitable organizations as well. However, there is another and overlooked way to help; donate the value of your accrued PTO. The IRS has announced a new program that allows employees to donate the value of their vacation, sick time, or other paid time off (“PTO”) for the relief of hurricane victims.

On September 5, 2017, the IRS issued IRS Notice 2017-48 which allows employers to contribute the value of the PTO contributed by employees as Hurricane Harvey relief to a non-profit organization and be entitled to a deduction that would be treated as a business expense, rather than as a charitable contribution.

Under these programs, employees may forgo their vacation, sick or personal leave in exchange for cash payments the employer makes, before Jan. 1, 2019, to charitable organizations providing relief for the victims of this disaster. Under this special relief, the donated leave will not be included in the income or wages of the employees. Employers will be permitted to deduct the cash payments as business expenses. The employees who make the donations will not be entitled to take charitable contribution deductions, but will not be subject to income or social security taxes on the amounts donated.

This differs from a traditional leave donation program, under which employees can donate a portion of their PTO to be used in kind by employers who were affected by a natural disaster such as Hurricane Harvey. The temporary relief announced by the IRS allows the value of the donated PTO to be converted into cash charitable contributions, making it more widely useful, particularly in the case of employers who do not have employees located in the area affected by Hurricane Harvey.

This relief is similar to that provided following Hurricane Katrina in 2005, Hurricane Sandy in 2012, the Ebola outbreak in West Africa in 2014, and last year following Hurricane Matthew and severe flooding in Louisiana.

It remains to be seen if similar rules will be made based on Hurricane Irma or even Hurricane Jose. These are massive storms as well, and if current modeling holds true, the devastation likely to be caused by these storms may be even worse that what Hurricane Harvey left in its wake.

This IRS Notice is good news for both employers as well as employees. It comes at a time when the need is great and allows favorable tax treatments for both the employer and the employee. It is also a painless way to give and help those less fortunate, who, in many cases have lost everything. Americans have always extended their hand to help those in need. Now the IRS, of all people, is giving you an extra reason to donate.  Please consider making a donation of your accrued PTO to help those in need. They will appreciate it, and when tax time rolls around next year, so will you!

With over 33 years’ experience in advising employers and employees on workplace issues, let Boznos Law work with you to ensure you are ready to meet the challenges posed by the changes to the employment laws. Call Bill Boznos today at (630) 375-1958 or contact us at through our website.



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