n-20-46.pdf

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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

Notice 2020-46

Subsequent to the March 13, 2020, emergency declaration issued by the
President of the United States under the authority of the Robert T. Stafford Disaster
Relief and Emergency Assistance Act (Stafford Act) (42 U.S.C. 5121 et seq.) in
response to the ongoing Coronavirus Disease 2019 (COVID-19) pandemic, the
President issued major disaster declarations under the authority of the Stafford Act for
each of the 50 states, the District of Columbia, and five U.S. territories (affected
geographic areas).
1
This notice provides guidance under the Internal Revenue Code
(Code) on the federal income and employment tax treatment of cash payments made by
employers under leave-based donation programs to aid victims of the ongoing COVID-
19 pandemic in the affected geographic areas.
EMPLOYER LEAVE-BASED DONATION PROGRAMS
In response to the need to provide relief to victims of the COVID-19 pandemic
throughout the affected geographic areas, 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

1
See https://www.fema.gov/coronavirus/disaster-declarations.

- 2 -
for cash payments that the employer makes to charitable organizations described in
section 170(c) of the Code (section 170(c) organizations).
TREATMENT OF EMPLOYER LEAVE-BASED DONATION PAYMENTS
Cash payments an employer makes to section 170(c) organizations in exchange
for vacation, sick, or personal leave that its employees elect to forgo will not be treated
as wages (or compensation, as applicable) to the employees or otherwise be included
in the gross income of the employees if the payments are: (1) made to the
section 170(c) organizations for the relief of victims of the COVID-19 pandemic in the
affected geographic areas; and (2) paid to the section 170(c) organizations before
January 1, 2021. Similarly, employees electing to forgo leave will not be treated as
having constructively received gross income or wages (or compensation, as applicable).
The amount of cash payments to which this guidance applies should not be included in
Box 1, 3 (if applicable), or 5 of the Form W-2. Electing employees may not claim a
charitable contribution deduction under section 170 with respect to the value of forgone
leave.
An employer may deduct these cash payments under the rules of section 170 or
the rules of section 162 if the employer otherwise meets the respective requirements of
either section.
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).