On July 29, 2021, the Internal Revenue Service (IRS) updated its Tax Credits for Paid Leave Under the American Rescue Plan Act (ARPA) of 2021 Guidance (the Guidance). As a reminder, private sector employers with fewer than 500 employees could voluntarily elect to extend ARPA benefits to their employees through Sept. 30, 2021, and in exchange, receive a federal tax credit. 

Read More >> IRS Updates American Rescue Plan Act Guidance

The "Act to provide for reconciliation pursuant to titles II and V of the concurrent resolution on the budget for the fiscal year 2018" a.k.a. the Tax Cuts and Jobs Act of 2017 (the "Tax Act") will, among other things, likely make negotiations in connection with sexual harassment or sexual abuse claims more difficult, and settlements for such claims more expensive for employers.

Read More >> #MeToo Meets the Internal Revenue Code

In response to disasters such as hurricanes and earthquakes, the general community comes together to assist those in need — donating our blood, time, money, and belongings.  We respond similarly when one of our co-workers experiences an illness, death, accident, fire, or other severe financial hardship.  Employers often ask us:  “What can we do?”

Helping your employees and co-workers can be as easy as 1-2-3, once you crack the Code.  The Internal Revenue Code, that is.  If you know where to look, you can find some real win-win options.

1. Tax-Free Employer Payments:  Employers may make direct payments (i.e., “qualified disaster relief payments”) that are tax-free to employees AND deductible by employers.
2. Employer-Sponsored Public Charities:  Another more flexible (and perpetual) option is to form a public charity in as little as a single day.  An emergency assistance fund backed up by an employer-sponsored public charity can boost workplace morale and enhance an employer’s familial culture.  The employer and employees may make tax-deductible donations which are provided (directly and tax-free) to other employees/former employees affected by disasters and other hardships.
3. Leave-Based Donation Programs:  Employers can adopt leave-based donation programs whereby employees donate leave time to be paid by the employers to a charity.  The employees will not be taxed on the donated leave, nor will they be able to claim a charitable deduction on their individual tax returns.  Employers may take a deduction for the employees’ contributions without regard to the normal limitations on corporate charitable donations.

In addition to the above, the IRS, DOL, and PBGC have granted multiple forms of relief to taxpayers impacted by the hurricanes and other disasters, and President Trump recently signed the “Disaster Tax Relief and Airport and Airway Extension Act of 2017,” which, among other things, provides emergency tax relief for individuals and employers.

Watch for an upcoming Bond Client Alert providing more detail on all of these relief programs.

We want to send our best wishes to the entire Bond family (all of our friends, colleagues, and clients) already affected by the recent storms and those currently in the path of Hurricane Nate.  Our thoughts are with you and we are ready to help.

Author’s Note:  Many thanks to first-year Bond associate Stephanie Fedorka for her assistance with this blog article.  Her research time does not constitute a charitable donation to anyone other than the author.