n-18-89.pdf

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Treatment of Amounts Paid to Section 170(c) Organizations under Employer Leave-
Based Donation Programs to Aid Victims of Hurricane Michael

Notice 2018-89

This notice provides guidance on the treatment of leave-based donation
programs to aid victims of Hurricane Michael.
TREATMENT OF LEAVE-BASED DONATION PAYMENTS
In response to the extreme need for charitable relief for victims of Hurricane
Michael, employers may have adopted or may be considering adopting leave-based
donation programs. Under leave-based donation programs, employees can elect to
forgo vacation, sick, or personal leave in exchange for cash payments that the employer
makes to charitable organizations described in § 170(c) of the Internal Revenue Code
(§ 170(c) organizations). This notice provides guidance for income and employment tax
purposes on the treatment of cash payments made by employers under leave-based
donation programs for the relief of victims of Hurricane Michael.
The Internal Revenue Service (the Service) will not assert that cash payments an
employer makes to § 170(c) organizations in exchange for vacation, sick, or personal
leave that its employees elect to forgo constitute gross income or wages of the
employees if the payments are: (1) made to the § 170(c) organizations for the relief of

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victims of Hurricane Michael; and (2) paid to the § 170(c) organizations before January
1, 2020.
Similarly, the Service will not assert that the opportunity to make such an election
results in constructive receipt of gross income or wages for employees. Electing
employees may not claim a charitable contribution deduction under § 170 with respect
to the value of forgone leave excluded from compensation and wages.
The Service will not assert that an employer is permitted to deduct these cash
payments exclusively under the rules of § 170 rather than the rules of § 162. Cash
payments to which this guidance applies need not be included in Box 1, 3 (if applicable),
or 5 of the Form W-2.
DRAFTING INFORMATION
For further information, please contact Suzanne R. Sinno of the Office of
Associate Chief Counsel (Income Tax and Accounting) at (202) 317-4718 (not a toll-free
call).