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IRS Issues Guidance on Employer COVID-19 Leave-Based Charitable Donation Payments

In Notice 2020-46, the IRS provided guidance allowing employers to make cash payments to certain charitable organizations in exchange for vacation, sick, or personal leave that its employees elect to forgo without otherwise including such amounts in the employees’ gross income. In order to qualify for this relief, the payments must be made to a qualifying charitable organization no later than December 31, 2020 for the relief of victims of the COVID-19 pandemic as set forth in President Trump’s March 13, 2020 declaration of a nationwide emergency (a copy of which is available here). The employees will not be treated as constructively receiving any of the amounts they elect to forgo under the program, and the employees cannot claim a charitable contribution deduction with respect to the value of the forgone paid leave. Employers should (i) make sure that any election made by their employees is in writing and the recipient… Continue Reading

IRS Expands Definition of Qualified Individual for Loans and Coronavirus-Related Distributions under the CARES Act

Notice 2020-50 provides additional guidance to taxpayers and sponsors of qualified retirement plans regarding coronavirus-related distributions and loan extensions under the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”). Among the guidance included in Notice 2020-50 are the following three items of special importance to plan sponsors: Notice 2020-50 expands the definition of “Qualified Individual” for purposes of eligibility to receive a coronavirus-related distribution or special loan treatment to also include three new categories of individuals: an individual having a reduction in pay (or self-employment income) due to COVID-19 or having a job offer rescinded or start date for a job delayed due to COVID-19; an individual whose spouse or a member of the individual’s household (as defined below) is quarantined, furloughed or laid off, or has work hours reduced due to COVID-19, is unable to work due to lack of childcare due to COVID-19, has a reduction… Continue Reading

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