We are considering creating a Major Disaster Leave-Sharing Plan, but the purpose would be primarily to assist the nonessential employees during the City’s closure to the public. The intent would be to allow the employees who are not working (and run out of leave) to accept donated leave to allow them to continue to get paid during the closure. But I wanted to confirm that the IRS would consider an employer not having work for an employee an “adverse impact.” The IRS states such a plan would be permitted where it “allows a leave donor to deposit accrued leave in an employer sponsored leave bank for use by other employees who have been adversely affected by a major disaster. For purposes of the plan, an employee is considered to be adversely affected by a major disaster if the disaster has caused severe hardship to the employee or a family member of the employee that requires the employee to be absent from work.” If an employer does not have work for an employee, is this an adverse impact for the purposes of offering the employee donated leave under a Major Disaster Leave-Sharing Plan? This may have already been circulated (I am new to the list serve), but if anyone has a Major Disaster Leave-Sharing Plan they would be willing to share, I would greatly appreciate it. Thank you, Kristina Escamilla Gilmore Kristina E. Gilmore Assistant City Attorney 240 Water Street, PO Box 95050, MSC 144, Henderson NV 89009-5050 Direct: 702-267-1219 Cell: 702-972-0621 | Fax: 702-267-1201 | Kristina.Gilmore@cityofhenderson.com<mailto:Kristina.Gilmore@cityofhenderson.com> Assistant: 702-267-1239 or Laura Kopanski at Laura.Kopanski@cityofhenderson.com<mailto:Laura.Kopanski@cityofhenderson.com> Office Hours: Monday - Thursday 7:30a.m. to 5:30p.m. CONFIDENTIALITY NOTICE: This electronic transmission and any accompanying document contains information belonging to the sender which may be confidential and legally privileged. This information is intended only for the use of the individual or entity to whom this electronic transmission was sent as indicated above. If you are not the intended recipient, any disclosure, copying, distribution or action taken in reliance on the contents of the information contained in this electronic transmission is strictly prohibited. If you have received this transmission in error, please notify us immediately by e-mail and delete the original message. Thank you. From: Disasterrelief <disasterrelief-bounces@lists.imla.org> On Behalf Of Grover, Neil A. Sent: Tuesday, April 7, 2020 7:51 AM To: Pridgen, Kelly <KPridgen@ACCG.org>; Magana, Jennifer <JMagana@wichita.gov>; disasterrelief@lists.imla.org Subject: Re: [Disasterrelief] Tax consequences of shared leave EXTERNAL ________________________________ 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<mailto:disasterrelief-bounces@lists.imla.org>> On Behalf Of Pridgen, Kelly Sent: Tuesday, April 7, 2020 9:40 AM To: Magana, Jennifer <JMagana@wichita.gov<mailto:JMagana@wichita.gov>>; disasterrelief@lists.imla.org<mailto: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<https://gcc02.safelinks.protection.outlook.com/?url=https%3A%2F%2Fwww.fema.gov%2Fdisasters%3Fpage%3D1&data=02%7C01%7C%7C9d2b0f3460b240cf16a608d7db032bc5%7C5470d25822a54cb9bfa68abec727e49d%7C1%7C0%7C637218678978143685&sdata=AHRVKoeUehD2cb2dQaaz6fUOvILn4ydwbORTZk5lpNg%3D&reserved=0> 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.