6/30/2021
Notice 2020-46: Treatment of Amounts Paid to Section 170(c) Organizations under Employer Leave Based Donation Programs to Aid Victims of the Coronavirus Disease (COVID-19) Pandemic extended tax relief through calendar year 2021 for employers whose employees refrain from taking sick, vacation or personal leave, opting instead to have their employer make a donation to those affected by the COVID-19 pandemic.
Notice 2021-42 Treatment of Amounts Paid to Section 170(c) Organizations under Employer Leave based Donation Programs to Aid Victims of the COVID-19 Pandemic says that cash payments employers make to charitable organizations for relief to victims of the COVID-19 pandemic in exchange for sick, vacation or personal leave their employees decline to take is not to be treated as compensation. The value of the leave will not be treated as income to the employees or reported on their W2s, nor can employees claim a deduction. The employers may, however, deduct the cash payments as a business expense or charitable contribution deduction if they meet all of the other requirements.
Notice 2020-46 and Notice 2021-42 provide more details for employers with these leave-based donation programs.
Resources:
Coronavirus Tax Relief for Businesses and Tax-Exempt Entities