On May 19, 2022, the IRS released Notice 2022-28. This notice provides guidance concerning the tax treatment of PTO donated by employees (through their employers) to charities assisting Ukraine.
Under employer leave-based donation programs, employees can elect to donate vacation, sick or personal leave in exchange for their employers making cash payments to charitable organizations described in section 170(c) of the Internal Revenue Code. Any such payments made by an employer before January 1, 2023, will not be treated as gross income or wages (or compensation, as applicable) of the employees of the employer. Employees whose leave funds the qualified employer leave-based donation payments will not be treated as having constructively received gross income or wages (or compensation, as applicable). Accordingly, employers should not include the amount of qualified employer leave based donation payments in Box 1, 3 (if applicable) or 5 of the electing employees’ Form W-2. Employees donating leave under these circumstances cannot claim that donation as a charitable donation.
Employers may deduct qualified employer leave-based donation payments under the rules of section 170 or the rules of section 162 of the IRC if the employer otherwise meets the respective requirements of either section of the Code.
Employers with leave-based donation programs should be aware of this notice.
IRS Notice 2022-28 »
PPI Benefit Solutions does not provide legal or tax advice. Compliance, regulatory and related content is for general informational purposes and is not guaranteed to be accurate or complete. You should consult an attorney or tax professional regarding the application or potential implications of laws, regulations or policies to your specific circumstances.
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