[author: Rena Pirsos, XpertHR Legal Editor]
As previously reported on XpertHR, due to the extreme need for charitable relief to victims of Hurricane Sandy, the Internal Revenue Service (IRS) recently issued guidance on the federal income and employment tax treatment of leave-based donation programs adopted by employers for this purpose. See Hurricane Sandy: IRS Permits Tax Relief for Leave-Based Donation Programs.
The New York State Department of Taxation and Finance has decided to provide similar relief to employees and employers making cash payments to qualified tax-exempt organizations under leave-based donation programs in support of Hurricane Sandy relief efforts. Such programs generally permit employees to donate their vacation, sick or personal leave in exchange for tax-free cash payments made by their employers to such charitable organizations.
Employees will not have to pay New York State, New York City or Yonkers income tax on the cash payments, and cannot claim a charitable deduction for the payments. Also, the cash payments will not be deemed wages subject to New York State, New York City or Yonkers income tax withholding, and are not included in an employer's payroll expense when computing the Metropolitan Commuter Transportation Mobility Tax. Employers will treat the payments on their New York income and corporate franchise tax returns in the same manner that they treat the payments on their federal tax returns.
DTF Important Notice, N-12-20, Dec. 2012.
Additional Resources
Hurricane Sandy: New York Temporarily Suspends Withholding for Certain Nonresidents
Hurricane Sandy: Additional Tax Deadline Extensions for New York Employers
Hurricane Sandy: Tax Deadline Extensions for New York Employers
Hurricane Sandy: IRS and Several States Announce Relief for Victims
Payroll > Taxation of Employee Compensation > Leave-Sharing Plans
Payroll > Withholding Taxes > New York
