Empathy List Archives

MJ

Magana, Jennifer

Mon, Apr 6, 2020 10:06 PM

We are hoping to implement a shared leave plan to help employees during COVID-19 related leave. To avoid negative tax consequences to leave donors, we understand that the plan needs to be compliant with IRS Notice 2006-59, which defines a “major disaster” as

(a) a major disaster as declared by the President under § 401 of the Stafford Act, 42 U.S.C. § 5170, that warrants individual assistance or individual and public assistance from the federal government under that Act, or

(b) a major disaster or emergency as declared by the President pursuant to 5 U.S.C. § 6391, in the case of employees described in that statute. 5 U.S.C. § 6391 provides for shared leave plans for certain federal employees.

To date, the pandemic has been declared an “emergency,” but not a “major disaster,” by the President. Thus it appears that, currently, such a shared plan would have negative tax consequences for leave donors that are not covered by 5 U.S.C. § 6391

Some guidance we have found, however, suggests (without citing substantial authority) that non-federal employers may utilize shared leave plans without negative tax consequences to donors. Of course, this appears to contradict the applicable IRS Notice, noted above.

Is anyone aware of authority that allows for non-federal employee leave donors to a shared leave plan to avoid negative tax consequences absent a presidential declaration of a “major disaster?”

Thank you.

Jennifer Magaña│ City Attorney and Director of Law │City Attorney’s Office │City of Wichita
455 N. Main Street │Wichita, KS 67202│jmagana@wichita.gov
TEL 316.268.4681│FAX 316.268-4335

Disclaimer: IMPORTANT/CONFIDENTIAL: This electronic mail message contains information from the Wichita City Attorney’s Office which is privileged, confidential, and exempt from mandatory disclosure under applicable law and intended only for the use of the addressee(s) named herein. If the reader of this message is not the intended recipient or an agent of the intended recipient, you are hereby notified that any dissemination, distribution, or copying of this communication is strictly prohibited. If you have received this communication in error, please notify the City Attorney’s Office (316-268-4681) and delete the message completely from your computer system.

We are hoping to implement a shared leave plan to help employees during COVID-19 related leave. To avoid negative tax consequences to leave donors, we understand that the plan needs to be compliant with IRS Notice 2006-59, which defines a “major disaster” as (a) a major disaster as declared by the President under § 401 of the Stafford Act, 42 U.S.C. § 5170, that warrants individual assistance or individual and public assistance from the federal government under that Act, or (b) a major disaster or emergency as declared by the President pursuant to 5 U.S.C. § 6391, in the case of employees described in that statute. 5 U.S.C. § 6391 provides for shared leave plans for certain federal employees. To date, the pandemic has been declared an “emergency,” but not a “major disaster,” by the President. Thus it appears that, currently, such a shared plan would have negative tax consequences for leave donors that are not covered by 5 U.S.C. § 6391 Some guidance we have found, however, suggests (without citing substantial authority) that non-federal employers may utilize shared leave plans without negative tax consequences to donors. Of course, this appears to contradict the applicable IRS Notice, noted above. Is anyone aware of authority that allows for non-federal employee leave donors to a shared leave plan to avoid negative tax consequences absent a presidential declaration of a “major disaster?” Thank you. Jennifer Magaña│ City Attorney and Director of Law │City Attorney’s Office │City of Wichita 455 N. Main Street │Wichita, KS 67202│jmagana@wichita.gov TEL 316.268.4681│FAX 316.268-4335 Disclaimer: IMPORTANT/CONFIDENTIAL: This electronic mail message contains information from the Wichita City Attorney’s Office which is privileged, confidential, and exempt from mandatory disclosure under applicable law and intended only for the use of the addressee(s) named herein. If the reader of this message is not the intended recipient or an agent of the intended recipient, you are hereby notified that any dissemination, distribution, or copying of this communication is strictly prohibited. If you have received this communication in error, please notify the City Attorney’s Office (316-268-4681) and delete the message completely from your computer system.

PK

Pridgen, Kelly

Tue, Apr 7, 2020 1:39 PM

I am not a tax person, so I may not be answering the question asked. But, the President declared a disaster for each state last month. I have looked for a formal document for each state, but the best that I have located is a listing from FEMA.

https://www.fema.gov/disasters?page=1

From: Disasterrelief disasterrelief-bounces@lists.imla.org On Behalf Of Magana, Jennifer
Sent: Monday, April 6, 2020 6:07 PM
To: disasterrelief@lists.imla.org
Subject: [Disasterrelief] Tax consequences of shared leave

We are hoping to implement a shared leave plan to help employees during COVID-19 related leave. To avoid negative tax consequences to leave donors, we understand that the plan needs to be compliant with IRS Notice 2006-59, which defines a “major disaster” as

(a) a major disaster as declared by the President under § 401 of the Stafford Act, 42 U.S.C. § 5170, that warrants individual assistance or individual and public assistance from the federal government under that Act, or

(b) a major disaster or emergency as declared by the President pursuant to 5 U.S.C. § 6391, in the case of employees described in that statute. 5 U.S.C. § 6391 provides for shared leave plans for certain federal employees.

To date, the pandemic has been declared an “emergency,” but not a “major disaster,” by the President. Thus it appears that, currently, such a shared plan would have negative tax consequences for leave donors that are not covered by 5 U.S.C. § 6391

Some guidance we have found, however, suggests (without citing substantial authority) that non-federal employers may utilize shared leave plans without negative tax consequences to donors. Of course, this appears to contradict the applicable IRS Notice, noted above.

Is anyone aware of authority that allows for non-federal employee leave donors to a shared leave plan to avoid negative tax consequences absent a presidential declaration of a “major disaster?”

Thank you.

Jennifer Magaña│ City Attorney and Director of Law │City Attorney’s Office │City of Wichita
455 N. Main Street │Wichita, KS 67202│jmagana@wichita.gov
TEL 316.268.4681│FAX 316.268-4335

Disclaimer: IMPORTANT/CONFIDENTIAL: This electronic mail message contains information from the Wichita City Attorney’s Office which is privileged, confidential, and exempt from mandatory disclosure under applicable law and intended only for the use of the addressee(s) named herein. If the reader of this message is not the intended recipient or an agent of the intended recipient, you are hereby notified that any dissemination, distribution, or copying of this communication is strictly prohibited. If you have received this communication in error, please notify the City Attorney’s Office (316-268-4681) and delete the message completely from your computer system.

I am not a tax person, so I may not be answering the question asked. But, the President declared a disaster for each state last month. I have looked for a formal document for each state, but the best that I have located is a listing from FEMA. https://www.fema.gov/disasters?page=1 From: Disasterrelief <disasterrelief-bounces@lists.imla.org> On Behalf Of Magana, Jennifer Sent: Monday, April 6, 2020 6:07 PM To: disasterrelief@lists.imla.org Subject: [Disasterrelief] Tax consequences of shared leave We are hoping to implement a shared leave plan to help employees during COVID-19 related leave. To avoid negative tax consequences to leave donors, we understand that the plan needs to be compliant with IRS Notice 2006-59, which defines a “major disaster” as (a) a major disaster as declared by the President under § 401 of the Stafford Act, 42 U.S.C. § 5170, that warrants individual assistance or individual and public assistance from the federal government under that Act, or (b) a major disaster or emergency as declared by the President pursuant to 5 U.S.C. § 6391, in the case of employees described in that statute. 5 U.S.C. § 6391 provides for shared leave plans for certain federal employees. To date, the pandemic has been declared an “emergency,” but not a “major disaster,” by the President. Thus it appears that, currently, such a shared plan would have negative tax consequences for leave donors that are not covered by 5 U.S.C. § 6391 Some guidance we have found, however, suggests (without citing substantial authority) that non-federal employers may utilize shared leave plans without negative tax consequences to donors. Of course, this appears to contradict the applicable IRS Notice, noted above. Is anyone aware of authority that allows for non-federal employee leave donors to a shared leave plan to avoid negative tax consequences absent a presidential declaration of a “major disaster?” Thank you. Jennifer Magaña│ City Attorney and Director of Law │City Attorney’s Office │City of Wichita 455 N. Main Street │Wichita, KS 67202│jmagana@wichita.gov TEL 316.268.4681│FAX 316.268-4335 Disclaimer: IMPORTANT/CONFIDENTIAL: This electronic mail message contains information from the Wichita City Attorney’s Office which is privileged, confidential, and exempt from mandatory disclosure under applicable law and intended only for the use of the addressee(s) named herein. If the reader of this message is not the intended recipient or an agent of the intended recipient, you are hereby notified that any dissemination, distribution, or copying of this communication is strictly prohibited. If you have received this communication in error, please notify the City Attorney’s Office (316-268-4681) and delete the message completely from your computer system.

GN

Grover, Neil A.

Tue, Apr 7, 2020 2:50 PM

It appears from IRS Notice 2006-59 that the recipient of the leave gets taxed because they are receiving paid leave through a shared leave program. That benefit is simply compensation. It does not appear there are negative tax consequences to the donor or employer. Not a tax specialist either, but it appears the donor never receives the benefit, so the sole taxable event is the paycheck received by the recipient that was funded by the employer as paid leave.

From: Disasterrelief disasterrelief-bounces@lists.imla.org On Behalf Of Pridgen, Kelly
Sent: Tuesday, April 7, 2020 9:40 AM
To: Magana, Jennifer JMagana@wichita.gov; disasterrelief@lists.imla.org
Subject: Re: [Disasterrelief] Tax consequences of shared leave

CAUTION: This email originated from outside of the organization! Do not click links, open attachments or reply, unless you recognize the sender's email address and know the content is safe!
I am not a tax person, so I may not be answering the question asked. But, the President declared a disaster for each state last month. I have looked for a formal document for each state, but the best that I have located is a listing from FEMA.

https://www.fema.gov/disasters?page=1

From: Disasterrelief <disasterrelief-bounces@lists.imla.org mailto:disasterrelief-bounces@lists.imla.org> On Behalf Of Magana, Jennifer
Sent: Monday, April 6, 2020 6:07 PM
To: disasterrelief@lists.imla.org mailto:disasterrelief@lists.imla.org
Subject: [Disasterrelief] Tax consequences of shared leave

We are hoping to implement a shared leave plan to help employees during COVID-19 related leave. To avoid negative tax consequences to leave donors, we understand that the plan needs to be compliant with IRS Notice 2006-59, which defines a “major disaster” as

(a) a major disaster as declared by the President under § 401 of the Stafford Act, 42 U.S.C. § 5170, that warrants individual assistance or individual and public assistance from the federal government under that Act, or

(b) a major disaster or emergency as declared by the President pursuant to 5 U.S.C. § 6391, in the case of employees described in that statute. 5 U.S.C. § 6391 provides for shared leave plans for certain federal employees.

To date, the pandemic has been declared an “emergency,” but not a “major disaster,” by the President. Thus it appears that, currently, such a shared plan would have negative tax consequences for leave donors that are not covered by 5 U.S.C. § 6391

Some guidance we have found, however, suggests (without citing substantial authority) that non-federal employers may utilize shared leave plans without negative tax consequences to donors. Of course, this appears to contradict the applicable IRS Notice, noted above.

Is anyone aware of authority that allows for non-federal employee leave donors to a shared leave plan to avoid negative tax consequences absent a presidential declaration of a “major disaster?”

Thank you.

Jennifer Magaña│ City Attorney and Director of Law │City Attorney’s Office │City of Wichita
455 N. Main Street │Wichita, KS 67202│jmagana@wichita.gov
TEL 316.268.4681│FAX 316.268-4335

Disclaimer: IMPORTANT/CONFIDENTIAL: This electronic mail message contains information from the Wichita City Attorney’s Office which is privileged, confidential, and exempt from mandatory disclosure under applicable law and intended only for the use of the addressee(s) named herein. If the reader of this message is not the intended recipient or an agent of the intended recipient, you are hereby notified that any dissemination, distribution, or copying of this communication is strictly prohibited. If you have received this communication in error, please notify the City Attorney’s Office (316-268-4681) and delete the message completely from your computer system.

It appears from IRS Notice 2006-59 that the recipient of the leave gets taxed because they are receiving paid leave through a shared leave program. That benefit is simply compensation. It does not appear there are negative tax consequences to the donor or employer. Not a tax specialist either, but it appears the donor never receives the benefit, so the sole taxable event is the paycheck received by the recipient that was funded by the employer as paid leave. From: Disasterrelief <disasterrelief-bounces@lists.imla.org> On Behalf Of Pridgen, Kelly Sent: Tuesday, April 7, 2020 9:40 AM To: Magana, Jennifer <JMagana@wichita.gov>; disasterrelief@lists.imla.org Subject: Re: [Disasterrelief] Tax consequences of shared leave CAUTION: This email originated from outside of the organization! Do not click links, open attachments or reply, unless you recognize the sender's email address and know the content is safe! I am not a tax person, so I may not be answering the question asked. But, the President declared a disaster for each state last month. I have looked for a formal document for each state, but the best that I have located is a listing from FEMA. https://www.fema.gov/disasters?page=1 From: Disasterrelief <disasterrelief-bounces@lists.imla.org<mailto:disasterrelief-bounces@lists.imla.org>> On Behalf Of Magana, Jennifer Sent: Monday, April 6, 2020 6:07 PM To: disasterrelief@lists.imla.org<mailto:disasterrelief@lists.imla.org> Subject: [Disasterrelief] Tax consequences of shared leave We are hoping to implement a shared leave plan to help employees during COVID-19 related leave. To avoid negative tax consequences to leave donors, we understand that the plan needs to be compliant with IRS Notice 2006-59, which defines a “major disaster” as (a) a major disaster as declared by the President under § 401 of the Stafford Act, 42 U.S.C. § 5170, that warrants individual assistance or individual and public assistance from the federal government under that Act, or (b) a major disaster or emergency as declared by the President pursuant to 5 U.S.C. § 6391, in the case of employees described in that statute. 5 U.S.C. § 6391 provides for shared leave plans for certain federal employees. To date, the pandemic has been declared an “emergency,” but not a “major disaster,” by the President. Thus it appears that, currently, such a shared plan would have negative tax consequences for leave donors that are not covered by 5 U.S.C. § 6391 Some guidance we have found, however, suggests (without citing substantial authority) that non-federal employers may utilize shared leave plans without negative tax consequences to donors. Of course, this appears to contradict the applicable IRS Notice, noted above. Is anyone aware of authority that allows for non-federal employee leave donors to a shared leave plan to avoid negative tax consequences absent a presidential declaration of a “major disaster?” Thank you. Jennifer Magaña│ City Attorney and Director of Law │City Attorney’s Office │City of Wichita 455 N. Main Street │Wichita, KS 67202│jmagana@wichita.gov TEL 316.268.4681│FAX 316.268-4335 Disclaimer: IMPORTANT/CONFIDENTIAL: This electronic mail message contains information from the Wichita City Attorney’s Office which is privileged, confidential, and exempt from mandatory disclosure under applicable law and intended only for the use of the addressee(s) named herein. If the reader of this message is not the intended recipient or an agent of the intended recipient, you are hereby notified that any dissemination, distribution, or copying of this communication is strictly prohibited. If you have received this communication in error, please notify the City Attorney’s Office (316-268-4681) and delete the message completely from your computer system.